These characteristics could potentially address the concerns surrounding the performance
of high dividend payers in a rising - rate environment.
Summary
With high dividend payers, the best switching algorithm is very close to using a 75 % stock allocation when P / E10 is less than 17 and 25 % when it is greater than 17.
Typically, you'll see investors flock to
high dividend payers after a dramatic price decrease (as we are seeing with consumer staples).
If you had focused
on high dividend payers such as the utility subsector of the S&P 500 or MLP's through the Alerian MLP index, you would be up a whopping 103 % and 824 % respectively!
In equities, it means tilting your portfolio in favour of dividend growth stocks instead
of high dividend payers, which are more sensitive to rising rates.
With high dividend payers, the best switching algorithm is very close to using a 75 % stock allocation when P / E10 is less than 17 and 25 % when it is greater than 17.
So with ENB, I will benefit of both worlds:
high dividend payer and high quality stock.
Because most stocks, even
the high dividend payers among high quality companies, have a very low payout ratio by historical standards, today's dividends are more secure than in the past.