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Yield and Interest Rates: how do they compare throughout history


Staff member
For investors looking to get the most out of their portfolio, would be a curious thing to know what was the appeal of dividends when interest rates were high back in the day. For example, there was a time when banks paid up to 6% or more interest rate? If dividends have a yield of 4% , and even with capital gains, why bother with stocks and all their volatility, when you can simply put your money in the bank and earn 6% with no risks involved and full capital preservation.

Was dividend yield generally higher when interest rates higher? i.e does it keep up with interest rates? I don't see that to be the case at the moment, with these historical interest rates.

I tried to look up historical yield rates for some major companies and wasn't able to find data going back more than 10 years.

-For BCE for example, their yield about 10 years ago was close to 3.3% (today it is 4.67%) .

-For TD, their yield was about 2.3% 17 years ago (1999)

-RBC was an exception and had the best yield at around 4.2% back in 2000

If you look at the Canada Savings Bond interest rates around that same time period (1999-2000) it hovered around 4.4% , which is double what you get from stock yields for most stocks (with the exception of RBC maybe?) Even with capital gains, you were probably safer to just put your money in banks rather than worry about market fluctuations with stocks. Unless, of course, you were in it for investment for the very long term.

For those interested, here is a historical chart of Canada Saving Bond interest rates from 1946 to 2011. Interesting to see that 1981 saw the highest interest rate ever, at a whopping 19.50% ! Imagine having that now....