High dividend yields worked in the Large Stocks universe but not the All Stocks universe.
Not exact matches
I tend to let the
dividends accrue in cash (we'll sweep them to a
high interest account so they are still
working), but then once a quarter we look for the holding that is down the most (there's always one, it seems) and we will put it all into that one stock that is down — to get the
higher yield.
Bottom Line: Either way this «10 % Trade»
works out offers me the opportunity to generate a 10 % - plus annualized
yield from Wells Fargo (WFC)-- a
high - quality,
dividend growth stock that appears undervalued at current prices.
Bottom Line: Either way this «10 % Trade»
works out offers me the opportunity to pull in at least a 10 % annualized
yield from Apple (AAPL), a
high - quality
dividend growth stock that appears to be trading at a reasonable price.
In the past the
dividend yields on stocks were typically
higher than bonds, so a
working strategy was to sell stocks whenever
yields dropped below bonds and then buy them back again when
yields were
higher than bonds.
In short, you want to put your money to
work for you in
high - quality
dividend growth stocks for their safety and growing
dividend stream... but their current
yields are so suppressed today that you'd potentially have to wait a whole decade before being able to capture a double - digit
yield - on - cost.
With all of this in mind, there are two likely ways our
High -
Yield Trade of the Week would
work out, and they both offer significantly
higher income than what we'd collect if we relied on the stock's
dividends alone.
But I believe a fair proxy for reviewing the payout ratio is to use the regular
dividend and EPS for 2010, which
works out to be a payout ratio of under 60 %, which is reasonable for such a
high yield.