Profitable stocks now earn less than the 10-year Treasury yields
The median profitable stock earns 4.3% on its price, against 4.75% on the 10-year Treasury. That leaves stocks 0.5 points short, the thinnest since the series began in 2010, against a +2.2-point average.
Earnings yield against the 10-year Treasury yield
%, month-end; one axis, same unit
Earnings yield = trailing earnings / price; the median of a name-level ratio, not an index-level yield.
The gap: earnings yield minus the 10-year yield
Percentage points, monthly
What it means · inference
- Equities pay little extra for their extra risk
- Less room for earnings misses or higher yields
- Trailing earnings understate yields for fast growers
For investors · general, not personal financial advice
- Bonds now compete with stocks on yield alone
- Returns must come from earnings growth, not re-rating
- Cash-generative, reasonably priced stocks carry more cushion
What would change it
- 10-year yield 2.7 points lower restores the average
- Earnings growth lifting yields at today's prices
- Since Jul 2026, the 10-year has moved +0.54 to 5.29%
Method
- What is measured: Median trailing earnings yield (earnings / price) across the MCH reader-safe universe, profitable names and all names, against the 10-year Treasury yield, monthly since Jun 2010, latest Jul 2026 (factor-table vintage).
- Earnings yield (ey) from the warehouse monthly factor table: trailing earnings / price per name. Medians across reader-safe names with a value in each month; "profitable" = ey > 0.
- 10-year yield: last daily value on or before each factor date. The gap is the median earnings yield minus that yield.
- Survivor bias: history uses today's reader-safe universe (771 names in Jul 2026; 218 in Jun 2010), so companies that left the market are missing.
Sources
- MCH research warehouse, factor_scores through 31 Jul 2026.
- MCH research warehouse, US macro series (Alpha Vantage economic indicators); 10-year yield through 30 Sep 2026.
Universe
| Names in the published feed | 886 |
| Excluded: held, suspended, withdrawn, deferred, deal-pending or pending review | 58 |
| Reader-safe universe | 828 |
| Of which loss-making (dropped from the profitable median) | 44 |
| Used in this exhibit | 771 |
Names whose rating is held, suspended, withdrawn, deferred or under a pending deal are excluded from every exhibit, so no held output appears here.
General and impersonal investment research. Not personal financial advice. Forecasts, valuations and model outputs are estimates and may be wrong. See Investment Disclaimer.
MCH Analysis is a general investment-research publication of MCH Advisory (Pty) Ltd. It is not personal financial advice and does not take your circumstances into account. MCH is not a licensed financial services provider or a registered investment adviser. Past performance, whether actual or simulated, does not predict future results. Subscriber Agreement | Privacy and Cookie Notice | Research Governance Policies