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The case for stocks in one word: Yield

Stocks have become the new bonds. Or at least that’s the new buzz phrase on Wall Street.

But proof is in the numbers. And one key statistic tells the story in easy, understandable language: All 10 of the major sectors in the Standard & Poor’s 500 stock index now pay out a bigger dividend than the benchmark 10year U.S. Treasury note, based on data as of the end of August, S&P Dow Jones Indices says.

In other words, investors who buy a basket of stocks in any sector of the S&P 500 will be buying into a better yield play than they can get from a long-term U.S. government bond.

Stocks have become proxies for bonds. And why not? An investor not excited about the 1.54% yield on the 10-year U.S. Treasury note can opt for a 4.54% yield on telecommunications shares. Or grab a 3.54% dividend from the utilities sector. Even tech-centric investors can get a 1.55% yield from the S&P 500’s growth-driven tech sector.

Indeed, the low-yield world is a big reason why the stock market continues to hover near all-time highs. Despite that, the S&P 500 is trading above its long-term average valuation and is, therefore, a tad pricey.

With 10-year government bonds in negative territory in places such as Germany and Japan, and the Federal Reserve not expected to hike short-term rates at its meeting in mid-September, there’s a good chance the plump yields on stocks will continue to be an attractive alternative for yield-starved investors.