The divergence in
March was of even
greater magnitude.in March 2009. By the end of the year, 12 companies in the S&P 500
discontinued dividends and 65 companies cut payouts, data com-
piled by Bloomberg show.
One staggering—and almost certainly evanescent—statistic
as of March 18, 2020: Thirty-two of the 505 S&P companies were
showing double-digit dividend yields. The largest was Occidental
Petroleum Corp., which registered an almost 30% yield. To track
this yourself, run {SPX <Index> MEMB <GO>}, type “dividend
yield” in the amber field to the left of Fields, click on the matching
item, and then on Current. Hit <GO> to add a column you can sort
by. In addition you can add a column for BDVD analysts’ dividend
health scores—a gauge of companies’ abilities to make payouts.
Type “BDVD Dividend Health” in the amber field, click on the BDVD
Current DVD Health item, and hit <GO>.
In turbulent times, investors can often find refuge in high
dividend yields. These can look especially attractive when you
consider how low yields on U.S. Treasuries have become. Investors,
however, need to understand which stocks are accidentally
high-yielding and which names can sustain those payouts.Fig. 1 A chart covering a half-century shows that the first time the S&P 500 dividend yield exceeded
the 30-year Treasury yield was during the global financial crisis in 2008.Coronavirus Has Upended the
Relationship Between
Bonds and Dividends, Too
By MARK JORDAN
Yield
HERE’S A RARE EVENT: The U.S. 30-year Treasury yield fell below
the dividend yield of the S&P 500 index. If you look back across
the past 50 years, long-dated government bonds had consistently
paid investors more than the U.S. stock benchmark’s payouts—until
the global financial crisis hit in 2008. The normal pattern reemerged
in April 2009 and after that was interrupted for only a handful of
days in 2016 and 2019.
Until now. The onset of the new coronavirus pandemic created
a fourth round of topsy-turvy yield regimes—and with greater diver-
gence than before.
You can use the Bloomberg Terminal to chart how dramatic
and swift the reversal of this relationship has been. Here’s how:
Type “chart S&P 500 dividend yield” in the command line and hit
amber field, type “30 year treasury yield” and select USGG30YR
Index in the list of matches. In the amber field to the right, type
“last price” and select the matching item. Hit Update.
To chart both series on the same axis, click Edit in the
red toolbar and select Securities & Data. Set Axis to R1 for both. Hit
Update. Change the start date to “12/31/1970” and press
In late 2008 the 30-year yield declined while the dividend
yield spiked as stock prices plunged. The dividend yield peaked
Jordan is an equity derivatives market specialist at
Bloomberg in New York.<GO> INSIDE THE TERMINAL 45