Treasury Yields Trump Dividends for America's Biggest Companies
The 10-year US Treasury bond now outpays 118 of America's biggest companies. Apple, Alphabet, Nvidia, and Broadcom are among those with lower dividend yields than the current 10-year Treasury yield.
Nvidia has a dividend yield of 0.46%, while the 10-year Treasury pays around 4.7% per year. This means that investors can earn more from a government bond than from Nvidia's dividend payments, despite taking on no earnings risk.
This trend is not unique to Nvidia; in fact, it is the norm among large-cap technology companies. The number of S&P 500 companies with higher dividend yields than the 10-year Treasury has plummeted to just 3.85%, the lowest reading since May 2007.
The Federal Reserve's decision not to signal a rate hike in response to inflation, leaving long-dated yields to rise instead, is also contributing to this shift. As the bond market sets the hurdle for dividend payments, investors are increasingly turning to bonds as a source of income.