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The search for yield

As of Friday, July 8, the S&P 500 dividend yield was more than 60 basis points higher than the yield on the benchmark 10-year U.S. Treasury bond. Since March 2009, there have only been five other months in which S&P 500 dividends out-yielded the 10-year Treasury by at least 50 basis points. According to Kensho, one month after these five episodes, the S&P 500 traded positive 100 percent of the time, returning an average of 3.83 percent.

That may help explain the move to record highs this week, and could be a sign of more gains ahead.

So where do investors tend to go for yield when the 10-year drops so far below the S&P 500 dividend yield? Turns out six of the S&P sectors outperform the S&P 500, led by financials, which return an average of 7.18 percent and have, like the S&P 500, traded positive all 5 times.