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A Though On Duscussion To Chuck Carnevale Article " Dividends Provide A Return Bonus"

I just read fruitful discussion to recent SA article about role of dividends and would like outline a simple example.

Let imagine that I am a house buyer and you are a lender. I put 50% down-payment and propose 2 choices:

a) regular 30 years fixed rate mortgage (so it is typical US mortgage, I do not invite anything new here) that cannot be accelerated for simplicity to compare with the next case:

b) I promise re-invest all interest in the house improvement accordingly with standard 30 years fixed rate mortgage schedule /case a)/, sell the house in 30 years, and return 50% of selling price to lender.

IMO opinion if lender is kind of dividend investor she choose the case a) and if lender is kind of capital appreciation investor she choose the case b).

Well, we all know that banks prefer.....

Another line of defence of finance scholars is risk. I have write my opinion about it in SA blog already, let me give hopefully relevant example.

Just due to my curiosity I compared mortgage rates (from with S&P500 yield - see figure below.

It seems that in this comparison risk of mortgage failure or prepayment significantly large than risk of US economy failure to grow, so interest rates are significantly higher than dividends. Yale's prof. R. Shiller probably has better data ( and explanations but I hope I illustrated the point. But IMO risk of total US economy failure should equally affect S&P 500 and Treasury bonds, hence so-called stock premium is questionable, and therefore conclusion of modern finance theory are not always correct.