Dividend Yield vs Treasury Yield — Who Dey Win Now?

Right now a 3-month Treasury bill dey pay about 3.84%, and that risk-free cash rate dey sit above the dividend yield on 9 of the 15 blue-chip payers wey dey below. Dividend yield na the annual cash wey stock dey pay, divide by im share price. The Treasury yield for 3-month bill na wetin US government go pay you to hold cash for three months. When cash out-yield dividend, the income math go flip: you go collect more, with far less price risk, by parking money inside T-bill.

Dividend yield vs Treasury yield, side by side

The chart below take fifteen well-known dividend names, sum each one cash payouts for the trailing year, and divide by im latest share price to get dividend yield. The flat line na the current 3-month T-bill yield. Any bar wey dey below that line dey pay you less income than idle cash.

WITH tickers AS (
    SELECT arrayJoin(['KO','JNJ','PG','PEP','MCD','MMM','MO','VZ','XOM','CVX','IBM','KMB','O','T','ABBV']) AS ticker
),
divs AS (
    SELECT ticker, sum(cash_amount) AS annual_div
    FROM global_markets.stocks_dividends
    WHERE ticker IN (SELECT ticker FROM tickers)
      AND frequency IN (1, 2, 4, 12)
      AND ex_dividend_date >= today() - 370
    GROUP BY ticker
),
px AS (
    SELECT ticker, argMax(toFloat64(close), window_start) AS price
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker IN (SELECT ticker FROM tickers)
      AND window_start >= now() - INTERVAL 5 DAY
    GROUP BY ticker
),
tb AS (
    SELECT round(yield_3_month, 2) AS t3mo
    FROM global_markets.treasury_yields
    ORDER BY date DESC
    LIMIT 1
)
SELECT d.ticker AS ticker,
       round(100 * d.annual_div / p.price, 2) AS dividend_yield_pct,
       (SELECT t3mo FROM tb) AS tbill_3mo_pct
FROM divs d
INNER JOIN px p ON d.ticker = p.ticker
ORDER BY dividend_yield_pct DESC

Across these 15 payers, dividend yields dey run from 6.4% for the top down to 1.89% for the bottom. The 3-month T-bill dey sit at 3.84%. The names wey dey above the line dey occupy the classic high-yield corners of the market: one telecom, one tobacco maker, one monthly-paying REIT. The names wey dey below am na household staples and industrials wey their share prices don climb faster than their payouts, push the yield down.

How many blue chips dey yield less than cash?

Dividend yield go fall anytime the share price rise faster than the dividend. After two years of gains for staples and consumer names, cluster of former income favorites now dey pay less than Treasury bill. The one-row panel below dey count dem against the current T-bill rate.

WITH tickers AS (
    SELECT arrayJoin(['KO','JNJ','PG','PEP','MCD','MMM','MO','VZ','XOM','CVX','IBM','KMB','O','T','ABBV']) AS ticker
),
divs AS (
    SELECT ticker, sum(cash_amount) AS annual_div
    FROM global_markets.stocks_dividends
    WHERE ticker IN (SELECT ticker FROM tickers)
      AND frequency IN (1, 2, 4, 12)
      AND ex_dividend_date >= today() - 370
    GROUP BY ticker
),
px AS (
    SELECT ticker, argMax(toFloat64(close), window_start) AS price
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker IN (SELECT ticker FROM tickers)
      AND window_start >= now() - INTERVAL 5 DAY
    GROUP BY ticker
),
tb AS (
    SELECT round(yield_3_month, 2) AS t3mo
    FROM global_markets.treasury_yields
    ORDER BY date DESC
    LIMIT 1
),
ylds AS (
    SELECT d.ticker AS ticker,
           round(100 * d.annual_div / p.price, 2) AS dy
    FROM divs d
    INNER JOIN px p ON d.ticker = p.ticker
)
SELECT count() AS payers,
       countIf(dy < (SELECT t3mo FROM tb)) AS below_tbill,
       countIf(dy >= (SELECT t3mo FROM tb)) AS at_or_above_tbill,
       (SELECT t3mo FROM tb) AS tbill_3mo_pct
FROM ylds

Of the 15 payers, 9 dey yield less than the 3.84% T-bill and 6 match or beat am. Saver wey dey hold cash inside T-bill currently dey earn more than shareholder for any of those 9 names dey collect for dividends, before you count share-price moves for either direction. The count no dey fixed: every quarter of price gains without matching dividend hike go nudge another name under the line, and jump for the payout or fall for the stock go lift one back above am.

Dividend yield no be T-bill yield

Even where dividend yield edges out the T-bill, the two numbers no dey interchangeable. Treasury bill dey return fixed face value when e mature, and im principal no dey swing with the stock market. Dividend dey arrive only while the company dey pay am, and the share price wey dey under am dey move every day. 6.4% dividend yield wey pair with double-digit drop for the share price na losing year; the T-bill no carry any exposure like that for im short life. This na the trade wey the yield gap dey hide: the higher number for dividend stock dey come attach to equity risk wey the bill no carry.

To lean on one single high-yield name for income na to concentrate that risk inside one company payout policy. Concentration risk dey cover wetin over-weighting one position do to portfolio, and the timing of who actually receive the next payment dey turn on the ex-dividend date. Investors wey dey chase the top of the yield chart suppose read the payout history first: yield wey dey near the top of this group fit mark stock wey the market don already mark down, no be bargain income stream.

Where cash fit right now

T-bill yield wey dey above much of the dividend universe dey change the default home for money wey you no ready to deploy. Idle cash wey you leave inside low-rate account dey earn nothing close to 3.84%; the same cash inside short Treasury or government money-market fund dey earn the rate wey dem chart above with no equity risk. Where to park idle cash dey walk through the short-term vehicles wey dey carry the T-bill rate, and how dem take compare for access and tax treatment.

Dividend stocks still dey offer something wey bill no fit: payout wey fit grow and share price wey fit appreciate over years, where bill dey return only im stated yield and then mature. The comparison no dey crown winner. E dey show wetin each one dey pay today, so income investor go size the equity risk against the cash rate with the real numbers for front of dem, no be rule of thumb.

FAQ

Treasury bill dey pay more than dividend stocks right now?

For much of the blue-chip group, yes. The 3-month T-bill dey yield 3.84%, above the dividend yield of 9 of the 15 large payers wey dem chart here. The highest-yielding names still dey beat am, topping out at 6.4%.

Dividend yield dey comparable to Treasury yield?

Dem dey measure income the same way, annual cash over price, but dem dey carry different risk. Treasury bill dey return fixed principal when e mature. Dividend fit cut and the share price fit fall; equal yield no be equal deal.

Why you go hold dividend stock wey dey yield less than cash?

Dividends fit grow over time and share prices fit appreciate, while T-bill dey return only im fixed yield. Investors wey dey hold the lower-yield staples wey dem chart here dey generally pay for expected dividend growth and price gains, no be today income.

Wetin be the risk-free rate?

The risk-free rate na the return for US Treasury of matching maturity, dem dey take am as the baseline wey every other investment dem dey measure against. Short T-bill na the standard stand-in for cash. When dividend yield dey sit below am, the stock dey pay less income than the risk-free baseline while e still dey carry full equity risk.

Every panel dey ship with the SQL wey dey behind am. Expand any chart to audit the numbers, or run the dividend-versus-Treasury comparison yourself for the Strasmore terminal.