Quick Bite | From TINA to TIAA

High “risk free” US Treasury yields make dividend yields look pretty slim right now.  As shown below, three years ago in August 2020, the S&P’s dividend yield of 1.79% was more than 45 basis points (bps) higher than the highest yield on the Treasury curve (the 30-year at 1.33%), and every Treasury note with a duration shorter than 5 years had a yield below 0.20%. At the time, the “TINA” (There Is No Alternative) trade was in full effect.

Today it’s a different story. The S&P’s dividend yield of 1.55% is 260 bps (2.6%) lower than the lowest point on the Treasury curve right now (the 10-year at 4.15%).  The 6-month T-Bill yielding 5.49% is 4% higher than the S&P’s dividend yield.  Investors have gone from TINA to TIAA (There Is An Alternative) indeed.

Source: Bespoke Investment Group


It’s a similar story in Australia, although not nearly as pronounced. The yield on 10 year government bonds of 4.2% is about 30 bps higher than the dividend yield of the ASX at 3.9% (and that’s before franking credits).




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