"Why can't we have a better financial press?": MarketWatch

Brett Arends of MarketWatch makes a flawed argument in favor of selected high dividend stocks over U.S. Treasuries:

The rush into Treasurys has driven the yield on 10-year bonds tumbling, below 3%. Meanwhile, the sell-off on Wall Street has driven stock yields in the opposite direction. You can now find top quality blue-chip stocks that offer dividend yields better than 3%.

The fact: 10-year US Treasuries have returned 4.9% this year. Stocks in Arend's list like Verizon and Merck have returned +1.08% and -0.6%, respectively year to date. And those numbers include dividends.

The article omits the biggest risk: a drop in stock prices. Because of falling prices, Verizon and Merck stocks underperformed US Treasuries significanly year to date. How is it possible that 10-year Treasuries have returned 4.9% so far this year when rates are below 3%? Because interest rates have fallen. When interest rates fall, bond prices rise.

Think what you may about the merits of high dividend stocks. A comparison between bonds and stocks purely on yield is at best incomplete, at worst misleading when the impact of potentially dramatic price changes in the underlying securities are not discussed.