As a result, bond yields were lower than
the yields on common stocks.
For stock market investors the Earnings
Yield on a common stock is the equivalent of the Cap Rate on an apartment building investment.
Not exact matches
Here you will find information
on our
common and preferred
stock declared dividends, our payment history, current
yield and tax information in our Investors section.
Therefore, if the 20 - year Treasury bond is currently
yielding 3 percent, the market risk premium indicates that you can expect a return
on common stocks of approximately 8.5 percent (3 percent plus 5.5 percent).
Although the
yield may be higher
on preferred
stocks than bonds, the two asset classes have almost nothing in
common.
On the other hand, it does not also logically follow that every
common stock that carries a higher
yield is too risky to invest in.
Take the JPMorgan Series Y preferred share, which
yields 6.1 % as I write, more than triple the current payout
on JPM's
common stock!
When you mention dividend
stocks I assume you mean preferreds; so another issue I'll suggest is selecting
common stocks based only
on yield.
«As for
common stocks, they should trade at an earnings or FCF
yield greater than that of the highest after - tax
yield on debts and other instruments.»
When you have many different parties going into the markets seeking income, not caring where they get it from, and a shock hits one part of the market, the effect flows to other areas If all of a sudden
yields on junk bonds look cheaper, the
yield trade - offs of buying junk and selling dividend paying
common stocks looks attractive.
This is the
common, intuitive, yet specious claim that because
yields on 10 - year Treasury notes are near record lows at 1.64 %,
stocks are so flattered into appearing cheap by comparison that surely they must rise.
Dividend
yield: Annual percentage of return earned by an investor
on a
common or preferred
stock.
Expected volatilities are based
on a blend of historical and implied volatilities of our
common stock; the expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and our historical exercise patterns; and the risk - free rate is based
on the U.S. Treasury
yield curve in effect at the time of grant for periods corresponding with the expected life of the option.