Comments on: Comparing dividend yields vs. bond yields http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/ Everything to do with thickening your wallet Wed, 01 Feb 2012 15:44:00 +0000 hourly 1 http://wordpress.org/?v=3.3 By: Thicken My Wallet » Blog Archive » What does dividend yield tell us about the economy? http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-19924 Thicken My Wallet » Blog Archive » What does dividend yield tell us about the economy? Wed, 18 Nov 2009 09:01:36 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-19924 [...] instrument unless you believed capital appreciation would more than make up the difference of a low dividend yield vs. bond yield. You end up in this particular situation because the market is confident of capital appreciation [...] [...] instrument unless you believed capital appreciation would more than make up the difference of a low dividend yield vs. bond yield. You end up in this particular situation because the market is confident of capital appreciation [...]

]]> By: Dividend Tree Potpourri – May 17, 2009 | Dividend Tree http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18809 Dividend Tree Potpourri – May 17, 2009 | Dividend Tree Mon, 18 May 2009 02:10:55 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18809 [...] Dividend yield or bond yield? [...] [...] Dividend yield or bond yield? [...]

]]> By: BIGINTOBONDAGE http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18802 BIGINTOBONDAGE Fri, 15 May 2009 22:29:39 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18802 I wouldn't get too worked up about the priorities of bond holders being diminished or flipped under any American administration or in any legal bankruptcy proceedings. I admit, stocks usually have more upside. However, volatility is also part and parcel of the opportunity for gain, and a 10-49% increase in the dividend of a stock is meaningless (if you might need the money or if you don't like losses) in the context of a 50% evaporation of the price of a share. Microsoft had no creditors in the 80s, when it was a highly speculative growth company. and if it did have 10 year bonds before this year, they would have likely well out-performed the stock the past 10 years. DGI: I discuss how to use a laddered portfolio to seek out the best possible yields, and having the ability to wait for the best possible bond issues, in my blog http://canadianbondmarket.blogspot.com. I'm currently buying bonds that yield anywhere from 5-8%. No maturity is longer than 7 years, everything is investment-grade, i pay no MER fees other than an included one-time purchase commission, and i receive 'equity-like' returns- in cash in my hands- at the end of each month. the Canadian bond market follows interest rates (which follow inflation and the economy)so having money periodically returned to you each year gives you times to look for new issues. sometimes you can't find higher yielding bonds and this is a reality that reflects having to deal with fundamentally more conservative investments that guarantee to return your principal and the fact that inflation and interest rates rise and fall over time and your diversified bond portfolio will reflect these shifts. I wouldn’t get too worked up about the priorities of bond holders being diminished or flipped under any American administration or in any legal bankruptcy proceedings.

I admit, stocks usually have more upside. However, volatility is also part and parcel of the opportunity for gain, and a 10-49% increase in the dividend of a stock is meaningless (if you might need the money or if you don’t like losses) in the context of a 50% evaporation of the price of a share.
Microsoft had no creditors in the 80s, when it was a highly speculative growth company. and if it did have 10 year bonds before this year, they would have likely well out-performed the stock the past 10 years.

DGI: I discuss how to use a laddered portfolio to seek out the best possible yields, and having the ability to wait for the best possible bond issues, in my blog http://canadianbondmarket.blogspot.com. I’m currently buying bonds that yield anywhere from 5-8%. No maturity is longer than 7 years, everything is investment-grade, i pay no MER fees other than an included one-time purchase commission, and i receive ‘equity-like’ returns- in cash in my hands- at the end of each month.

the Canadian bond market follows interest rates (which follow inflation and the economy)so having money periodically returned to you each year gives you times to look for new issues. sometimes you can’t find higher yielding bonds and this is a reality that reflects having to deal with fundamentally more conservative investments that guarantee to return your principal and the fact that inflation and interest rates rise and fall over time and your diversified bond portfolio will reflect these shifts.

]]> By: admin http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18798 admin Fri, 15 May 2009 13:03:06 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18798 There's actually something interesting going on in the priority between bonds and equity in insolvency and its not good news for bond-holders. Obama has de facto taken "debt before equity" and flipped it around. I'll see if I can put together enough coherent thoughts to post on this. There’s actually something interesting going on in the priority between bonds and equity in insolvency and its not good news for bond-holders. Obama has de facto taken “debt before equity” and flipped it around. I’ll see if I can put together enough coherent thoughts to post on this.

]]> By: Dividend Growth Investor http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18796 Dividend Growth Investor Fri, 15 May 2009 07:29:07 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18796 BIB, I find your nickname interesting ;-) TMw, Nice article. I guess my main pro for dividend investing is that over time your dividend income could increase above the rate of inflation with stocks; with bonds however your only choice for hedging income against the eroding power of inflation is buying TIPs, which offer very small yields. With regular bonds I don't see how a laddered portfolio of bonds could increase my yield on cost from say 4% to 4.5%? Even if it were possible you could only increase your fixed income to a certain point.. The issue of stocks and bonds is very interesting to me. With bonds you do pay a certain amount that is in most cases given back to you at the end of maturity,, while also enjoying a fixed amount of interest paid out regularly to you. Your gain is limited. With stocks however your gain is unlimited. If you had the choic of going back to 1986, would you want to be the owner of Microsoft, or one of its creditors? BIB,

I find your nickname interesting ;-)

TMw,

Nice article. I guess my main pro for dividend investing is that over time your dividend income could increase above the rate of inflation with stocks; with bonds however your only choice for hedging income against the eroding power of inflation is buying TIPs, which offer very small yields.

With regular bonds I don’t see how a laddered portfolio of bonds could increase my yield on cost from say 4% to 4.5%? Even if it were possible you could only increase your fixed income to a certain point..

The issue of stocks and bonds is very interesting to me. With bonds you do pay a certain amount that is in most cases given back to you at the end of maturity,, while also enjoying a fixed amount of interest paid out regularly to you. Your gain is limited. With stocks however your gain is unlimited. If you had the choic of going back to 1986, would you want to be the owner of Microsoft, or one of its creditors?

]]> By: BIGINTOBONDAGE http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18788 BIGINTOBONDAGE Tue, 12 May 2009 17:07:38 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18788 Lance: you seem unfamiliar with the concept of a laddered portfolio of corporate bonds. Working with a high quality financial institution, and a broad knowledge of the investment-grade corporate bond market provides the same appreciation in yields and, for knowledgeable and timely investors, capital gain as well. Bonds also provide a promise to repay 100% of your capital at maturity- some dislike this aspect, some love it. read my blog to know about my DIY investor philosophy and strategy, focused primarily on BONDS! Lance: you seem unfamiliar with the concept of a laddered portfolio of corporate bonds. Working with a high quality financial institution, and a broad knowledge of the investment-grade corporate bond market provides the same appreciation in yields and, for knowledgeable and timely investors, capital gain as well.
Bonds also provide a promise to repay 100% of your capital at maturity- some dislike this aspect, some love it.
read my blog to know about my DIY investor philosophy and strategy, focused primarily on BONDS!

]]> By: Lance http://www.thickenmywallet.com/blog/wp/2009/05/11/comparing-dividend-yields-vs-bond-yields/comment-page-1/#comment-18784 Lance Tue, 12 May 2009 02:53:13 +0000 http://www.thickenmywallet.com/blog/wp/?p=935#comment-18784 One thing that dividend yielding stocks do that bonds do not is (on the average) appreciate in price over time. While bonds may pay out as much or more interest on principal, your principal does not increase. Compare that to most dividend yielding stocks that may have yielded a bit less in dividends but offered a significant capital gain in the process. One thing that dividend yielding stocks do that bonds do not is (on the average) appreciate in price over time. While bonds may pay out as much or more interest on principal, your principal does not increase. Compare that to most dividend yielding stocks that may have yielded a bit less in dividends but offered a significant capital gain in the process.

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