COTW: The Lowest Yields in History

January 15, 2020

The dividend yield on a diversified portfolio of large cap U.S. stocks, proxied by the S&P 500, is currently 1.75%. The yield on a portfolio of intermediate-term government bonds, proxied by the U.S. 10-Year Treasury Note, is about 1.83%. A blended or "balanced" portfolio of 60% stocks and 40% bonds currently yields under 1.8%, an all-time low.  This is even more alarming when viewed relative to inflation, which is quietly dipping into our pocketbooks and portfolios at a 2.3% annual rate. Also, according to the AARP, over three million Baby Boomers are expected to reach retirement age in 2020.


So, a near-record number of people are going to be entering retirement years with some of the most challenging yield prospects from relatively safe portfolios in a very long time, arguably ever. Is it any wonder then that investors are reaching for yield and Baby Boomers are refusing to retire?


The chart below can be downloaded here.



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