FILE PHOTO: A person wearing a face mask walks along Wall Street after further cases of coronavirus were confirmed in New York City, New York, U.S., March 6, 2020. REUTERS/Andrew Kelly - RC2LEF9U3U0Z/File PhotoThe dividend yield on the S&P 500 now exceeds the yield on the benchmark 10-year U.S. Treasury by its highest margin in nearly five decades after a flight to safe-haven assets compressed government bond yields to record lows.
By comparison, investors' rush to government bonds has pushed the yield on U.S. 10-year Treasuries to record lows, most recently on Thursday at 0.59per cent. Bond yields fall as prices rise. Historically, 10-year Treasury yields have almost always been higher than S&P 500 dividend yields, with a handful of exceptions since the 2008 financial crisis. At over 1.8 percentage points, the current spread between the S&P 500 dividend yield and 10-year Treasuries is the largest since at least the early 1970s, according to Datastream data, which does not go back any further.
Companies borrowing government money under a US$2 trillion economic stimulus package approved last week are not allowed to repurchase shares or pay dividends until they repay their loans. Corporations including Boeing, Macy's and Ford Motor have already suspended their dividends.
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