The Impact of Higher Yields

I spotted this at Bloomberg:

Following the biggest one-week jump in 10-year Treasury yields in more than a year, investors are selling the highest-yielding companies in the Standard & Poor’s 500 Index. The top quarter of dividend-yielding stocks in the S&P 500 have lost an average 0.4 percent since an employment report on Feb. 6 showed the U.S. is adding jobs at a faster rate than estimated. That compares with a gain of 2.6 percent for stocks with the smallest dividends, and a 1.7 percent climb in the benchmark gauge.

Stocks including utility companies and real-estate investment trusts have weighed on the benchmark gauge since Treasury yields climbed 32 basis points the week of the report, signaling caution to investors who piled into dividend stocks through the bull market, according to Sam Stovall, chief equity strategist at S&P Capital IQ.

Simple math: When bonds go down, those higher-yielding stocks lose some of their luster.

Posted by on February 17th, 2015 at 1:58 pm


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