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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: wooden ships who wrote (5943)7/14/1998 9:07:00 PM
From: Investor2  Read Replies (1) of 42834
 
Re: "the lowest US 30 year bond rate in history,"

While that may be true specifically for the 30-year Treasury bond, I believe that bond rates in general were lower many years ago. At that long-ago time, people believed that stocks should pay higher dividends than bond interest. The popular reasoning was that stock dividends may or may not be paid, depending on the profitability of the company at any given time. Conversely, bond interest payments were paid prior to payment of dividends. There was a much greater certainty of receiving the stated bond coupon. Because of the uncertainty of stock dividend payments, stocks were valued to pay a higher dividend yield than bond interest.

The conditions long ago were quite a bit different than now, as bonds currently yield about three times as much as stocks.

Best wishes,

I2

P.S. As a follow up, I found this link that may be of interest.

cpcug.org
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