As managing director at bond giant Pimco, Bill Gross might be considered by some to be the "bond king, " but he actually thinks dividend-paying stocks could be the better buy for long-term investors.
"I think ultimately, over time, that stocks – that high quality stocks, which return 2 to 3 percent, in terms of a dividend yield – are certainly a more attractive alternative relative to a 10-Year Treasury at 1.7 percent, " Gross told CNBC's "Futures Now ."
To Gross, efforts by the U.S. Federal Reserve to stimulate the economy by way of quantitative easing , or QE3, continues to affect both the bond and stock markets. The Fed's one power is to create money out of thin air and it's currently using that power. By buying $40 billion of mortgage-backed securities per month until unemployment improves, Gross said the Fed is basically "check writing, " which "props up" bond prices and lowers the yield on Treasurys. It also props up the stock market, he said, creating a "bubble" in both asset classes.