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CHART CENTRAL

Bond yields struggle to best dividend yields

The dividend yield of the S&P 500 index has remained steady around the 2% mark throughout the post-crisis recovery period as companies have grown their dividends to keep up with increasing share prices. The increase in asset prices can be partly attributed to continually low-yielding debt instruments as seen in 10-year government yields. Other factors such as the rapid growth of passive investing and recent improvements in earnings have also contributed to index returns.

Pre-2008, the yield on the 10-year government bond was markedly higher than equities before abruptly changing course in the depths of the crisis. While dividend yields found a footing around 2%, bond yields oscillated around that mark, spending significant time below equity-dividend yields during 2013 and again in 2016 amid economic growth and inflation concerns.

According to data from FactSet, the telecom sector is the highest yielding sector in the index, followed by the historically bond-like utilities and REIT sectors.