On a year-on-year basis, dividend yields of index funds are greater than even the 30-year treasury coupons; the spread is even more pronounced on shorter-dated treasuries. For instance, a year's worth of dividend's from Vanguard's S&P500 index fund divided by September's market price comes out to over 1.6%, compared to the 1.5% coupon on the 30-year treasury.
I remember hearing these facts laid out on some finance network, but in terms of their implication, I'm not sure they elaborated -- I can only remember they said that it was rare for index fund yields to outperform the 30-year treasury.
A large driver behind this seems to be Fed purchases / "don't fight the fed" investor mentality. However, unless absolutely necessary, I don't want the scope of the question to cover drivers. Maybe we can just treat it all as exogenous or a black box so that the focus can be on implications.
Anyway, the point is: When I hear these facts, nothing really jumps out at me, despite the alleged "rareness" and "significant-sounding" technical analysis. I have a feeling I'm not connecting the dots correctly.
What should be jumping out at me when I see index fund dividend yields outperforming 30-year treasury yields and what does theory have to say about the direction of fund flows / capital market?
Note: If you prefer to caveat your answer with a particular driver, that's fine, but I'd like to stick to high-level implications.