http://www.ritholtz.com/blog/2009/03/why-bother-with-bonds/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 16 Mar 2010 01:10:21 -0400 http://wordpress.org/?v=2.9.2 hourly 1 http://www.ritholtz.com/blog/2009/03/why-bother-with-bonds/comment-page-1/#comment-158242 rallip3 Mon, 30 Mar 2009 18:40:16 +0000 http://www.ritholtz.com/blog/?p=22765#comment-158242 A most interesting post. Could there be a dividend angle to the equity premium? Since World War II, dividends have never fallen hard on the SPX, and have in fact grown reliably at 5+% per annum (that figure again!). I am one who expects the LT return on equities to be the initial dividend yield + the dividend growth rate (currently 3.5% + 5% = 8.5%). My big fear is that with horribly low earnings on the SPX currently, dividends have to be cut so much that the 5%pa dividend growth line is breached. In a context of flat dividends over the next 5-10 years (nasty fall in 2009 and modest recovery thereafter), shareholders aiming at 7% returns will need to buy at 7% yields, i.e. at half present prices... A most interesting post.
Could there be a dividend angle to the equity premium? Since World War II, dividends have never fallen hard on the SPX, and have in fact grown reliably at 5+% per annum (that figure again!). I am one who expects the LT return on equities to be the initial dividend yield + the dividend growth rate (currently 3.5% + 5% = 8.5%). My big fear is that with horribly low earnings on the SPX currently, dividends have to be cut so much that the 5%pa dividend growth line is breached. In a context of flat dividends over the next 5-10 years (nasty fall in 2009 and modest recovery thereafter), shareholders aiming at 7% returns will need to buy at 7% yields, i.e. at half present prices…

]]> http://www.ritholtz.com/blog/2009/03/why-bother-with-bonds/comment-page-1/#comment-157883 MexicaliBlues Sun, 29 Mar 2009 02:16:18 +0000 http://www.ritholtz.com/blog/?p=22765#comment-157883 This is truly excellent, thank you for posting it. This is truly excellent, thank you for posting it.

]]>