In an email note today economist Steen Jakobsen notes the “S&P; Dividend Yield is Below the 10-Yr Treasury Yield (1.93% vs. 2.19%)”
S&P; Dividend Yield
click on chart for sharper image
Steen asks “Why own stocks at lofty PE of 18 when you can get better yield and a free put option via fixed income’?“
Curve Watchers Anonymous notes this chart of US treasury yields.
US Treasury Yields Over Time
click on chart for sharper image
$TYX – 30 Year Rate
$TNX – 10 Year Rate
$FVX – 05 Year Rate
$IRX – 03 Month Rate
Five Curve Watchers Anonymous Comments
- The normalized S&P; PE is an extremely lofty 24
- Forward estimates are ridiculously optimistic (they always are except at major bottoms)
- Earnings will revert to the mean
- The S&P; Dividend Yield under 2% is not at all attractive
- Stock are certainly not cheap by any realistic measure
A Look at Select Miners
- Newmont Mining Corporation (NEM) has a trailing PE of 9.91 with a dividend yield of 4.40% (about 43% of earnings)
- Goldcorp Inc. (GG) has a PE of 15.41 and a dividend yield of 2.2% (about 34% of earnings)
- Barrick Gold Corporation (ABX) has a dividend yield of 4.2%
Looking for value? Then don’t look where the herd is looking.
By the way, someone occasionally asks “who is curve watchers anonymous?” One person went so far as to do a search and wondered why the only references were to my blog. The reason is simple, I made up the name and have been using it for years.
Disclosure
I have investments in various miners as well as physical gold and silver at GoldMoney. Please do your own due diligence. You may also wish to consider Five Alternatives to FDIC “Insured Deposits”
I prefer GoldMoney to other precious metal holding companies but that is an admittedly biased opinion as I have a relationship with them. Anyone wanting additional information on GoldMoney: Please Email Mish
Mike “Mish” Shedlock
