The 10-Year Treasury Pays 5.2%. The S&P 500 Only Needs 4% Earnings Growth to Keep Up.

The 10-year Treasury yield hit 5.23%, its highest level since 2007, setting a new bar for equity returns. To match that risk-free rate over the next decade, the S&P 500 needs just 4% annual earnings growth—a threshold met in 80% of all 10-year periods since 1950, according to analysis from The Motley Fool.

VOO, which tracks the S&P 500, faces a straightforward math test: can corporate earnings compound fast enough to justify current multiples against a Treasury paying immediate income? The 4% hurdle is historically modest, but valuation risk looms. If price-to-earnings ratios contract while earnings grow, total returns could lag fixed income even as profits rise.

The Treasury delivers its 5.23% upfront with no volatility. The index fundbet requires a decade of patience and assumes multiples hold or expand. For investors with shorter horizons or lower risk tolerance, the bond offers a rare competitive yield without equity drawdowns.