Dividend yield versus bond yield

Found an interesting chart from the Big Picture (www.ritholtz.com) on the difference between dividend yields and bond yields for over 100 years. Notice the big difference between the first and second half of the graph. You got paid to hold equities during the first 85 years of history and then it was worth holding Treasuries at least when the rates were declining. Finally we are now at a period of equality between the two. 

This is a classic case of a chart that is interesting but perhaps not informative. Dividend yields during the early period were not taxed. Dividend yields post-2003 until recently had a strong tax advantage relative to yields on bond interest. The last forty years has been driven by the idea of stock buy-backs as a means of returning cash to investors not dividends. The chart also does not look at total return but only yields. 

So the dividend-yield story is much more complex than what can be shown in the chart, but the fact that Treasuries and dividend yields are approximately equal with similar volatility is an area of research worth exploring.