Volatility Is One of the Prices You Pay to Help Build Wealth

Main content

What a great time to be an equity investor: the trailing twelve-month yield (TTM) for global real estate investment trusts (REITs) is 5.06% and the TTM for the S&P 500 is 1.84%, compared to the 2.10% yield of the ten-year U.S. Treasury note. Yes, investors are getting paid bond-like yields simply for owning stocks, along with the upside potential for capital gains. What’s more, year-to-date total returns as of June 5 for global REITs and the S&P 500 are 15% and 13%, respectively. If you took an equal-weighted basket of equities — including U.S. large cap, mid cap, small cap global REITs, EAFE and emerging markets — the average yield would be 2.55%, that is, higher than current yields on U.S. Treasurys.

Do not be overwhelmed by the headlines; in our view, corporate earnings are on track to reach all-time highs. Buying equities certainly exposes investors to the risks of volatility, but volatility is one of the prices you pay to help build wealth.

For background on dividend yields, please see page 22 of the Voya Global Perspectives book.

Footer content