Investors who buyProcter & Gamble(PG)bonds that come due in 15 years get a yield to maturity of about 3% a year. Those who buy the company's stock, meanwhile, get a dividend yield of 3.7%. That's not how stocks and bonds are supposed to work. Since 1962, top-quality bonds in the U.S. have carried an average yield of 8%, while stocks have yielded an average of 3%, according to data from the Federal Reserve and Yale economist Robert Shiller. Historically, higher yields for bonds versus stocks have helped make up for the fact that dividends for healthy companies tend to grow over time, while bond coupons are fixed. P&G raised its dividend payment by 7% in April, marking 56 straight years of increases. If a company increases its dividend by 7% a year, payments to its shareholders will more than double by year 12, while those to its bondholders will be unchanged.... Continue to read.
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