Long-Term Treasury Yields Now Beat These Dividend Stalwarts. Is Government Debt the Top Passive-Income Play?
With new money ready to be allocated, income investors are faced with an important decision.
Overview
One of the biggest stories in markets this year has been how stubborn inflation remains. Geopolitical tension in the Middle East spurred the Consumer Price Index (CPI) in March, which rose 3.4% year over year in August. However, even before this conflict, the CPI was still well above the Federal Reserve's 2% target.
The market is starting to believe that inflation will stick around for a lot longer than initially expected. This could explain why Treasury yields, particularly for 10-, 20-, and 30-year terms, have risen significantly in the past 12 months. The assumption is that interest rates will stay elevated for an extended time, at least compared to most of the 2010s.
Details
Income investors looking to allocate capital are now faced with a crucial decision, one that might have been easier to make in the past. Is it smart to put money in dividend stalwarts, such as Coca-Cola (NYSE: KO) and Procter & Gamble (NYSE: PG)? Or should U.S. government bonds be on your shopping list?
Source
Originally published at www.fool.com.