The 30-Year Treasury Now Out-Yields Dividend Stocks by 2.2 Points. History Says What Followed the Last Time.
Key PointsThe 30-year Treasury yield topped 5.33% on Tuesday, Aug. 18 -- its highest level since 2007 -- while the Schwab U.S. Dividend Equity ETF yields about 3.1%.
On Aug. 18, the 30-year Treasury yield reached 5.33%, the highest level in 19 years, driven by concerns over inflation and government spending. This created a 2.2 percentage point gap between the bond and the Schwab U.S. Dividend Equity ETF, which yields about 3.1%. The last time this happened was in June 2007, when the long bond yielded 5.35%.
In that scenario, those who locked in the yield faced a significant gain when the financial crisis hit, with the 30-year yield collapsing to 2.69% by 2008. Dividend stocks, however, saw a sharp decline, with 110 negative dividend actions in 2007, 606 in 2008, and 804 in 2009. The Motley Fool Stock Advisor identified 10 stocks for long-term growth, noting that Schwab U.S. Dividend Equity ETF wasn't one of them.
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