In examining Table 1, you can see that the higher -
yielding stocks do not necessarily appear to be sacrificing capital gains, nor do the lower - yielding stocks appear to have an exclusive claim to high capital gains.
Regrettably, high - yield stocks didn't provide much of a buffer during the recent collapse — they generally declined in line with the overall market.
High - yield stocks don't always come with high risk.
Not exact matches
If the spring and summer don't bring some wet relief, the U.S. might well face another year of very low
yields after last year's summer drought — with the difference that global wheat, corn and soybean
stocks this time around would already be depleted.
Phantom -
stock plans (or
stock - appreciation rights, which are very similar) can
yield the same payoff option plans
do.
«When the Fed was raising rates and bond
yields were moving up, traditionally defensives don't
do well, and more cyclical
stocks tend to
do better and financials
do better,» he said.
To be sure, the new generation of savers faces a challenge in building a nest egg when investing choices are bleak:
Do they go with risky
stocks or super-low bond
yields?
AT&T's dividend
yield is about 5 - 6 %, but the
stock did not perform well.
At some point, provided that dividend is safe and investors are convinced it is going to be maintained, the dividend
yield on the
stock itself is going to be so attractive that it brings in buyers from the sidelines, people who otherwise can not stand to see the
yield right there in front of them without
doing something about it.
Is n`t —
do n`t you think there will come a time when the
yield on the 10 year will start to provide some competition from the
yields in the
stock market and that will have a problem for equity investors?
There are a multitude of reasons as to why this occurs but it's a powerful enough force that many investors have
done quite well for themselves over an investing lifetime by focusing on dividend
stocks, specifically one of two strategies - dividend growth, which focuses on acquiring a diversified portfolio of companies that have raised their dividends at rates considerably above average and high dividend
yield, which focuses on
stocks that offer significantly above - average dividend
yields as measured by the dividend rate compared to the
stock market price.
Not only
did Gross take on
stocks as an investment, he directly called out long - time
stock advocate Jeremy Siegel of the University of Pennsylvania Wharton School for promoting unrealistic expectations of future equity
yields.
To attribute the entire decline in
stock yields to interest rates as if it is a «fair value» relationship is to introduce a profound «omitted variables» bias into the whole analysis, which is exactly what the Fed Model
does.
However, keep in mind that the first move higher following a substantial market correction
does not generally
yield stellar results because new leadership in the
stock market is just becoming established.
As long - term investments, many factors that roil the
stock or even broader bond markets don't affect high
yield, the panelists pointed out.
Investors need to be careful and make sure they
do more research beyond just looking at the dividend
yield of a
stock.
Stocks slide on rising rates and
yield curve inversion concerns, but a recession doesn't look likely, judging by other economic data and the high -
yield bond...
Add in an impressive dividend
yield and these
stocks could be the difference between a portfolio that outperforms and one that doesn't.
Bond
yields have likely bottomed out, and we don't see scope for big rises in already elevated
stock market valuations amid tepid earnings growth.
Didn't want anyone to buy the
stock thinking they were getting a 7 %
yield.
I don't think it's a surprise that energy and financial
stocks popped up on the high
yield low PE screen.
The dividend
yield of 6.98 % is not accurate as it
does not reflect the recent 3:2
stock split.
Holding a lower
yielding stock with a higher growth rate will at some point provide higher returns assuming the growth rates don't change.
If you first grow and then rebalance to more
yield returning investments, you will have to realize your gains at some point along the way... I assume ideally you would prefer to
do that in a slow and steady process after retirement, but when you deal with growth
stocks you might also want to protect your gains by setting stop losses which could then create a huge taxable event on some random Friday morning...
Small
stocks and many international
stocks don't pay much income; income from high -
yield and foreign bonds may be higher than for high - quality bonds, but also more variable.
The mirror - image transactions — thousands of them over a four - year period — didn't
yield any profit on the
stocks, because they were conducted usually within moments of each other.
It doesn't have much of a
yield — just 1.3 % — but it's attractive as a growth
stock.
Sara Silverstein: So the 10 - year
yield went through an important threshold at 3 %, and
stocks didn't respond that great, what
do you think about that?
How
does the U.S.
stock market earnings
yield (inverse of price - to - earnings ratio, or E / P) interact with the U.S. inflation rate over the long run?
Does anyone really believe that extreme
yield - seeking has not already played out in the
stock and bond markets?
Do they not recognize that the absence of
yield on short - term money is exactly why
stocks and bonds are now also priced to deliver next to nothing over the coming 10 - 12 years?
The Federal Reserve's policy errors are now becoming quite apparent, particularly when you look at the major homebuilder
stocks, The
yield on the 10 - year Treasury breached below 1.80 today, but even lower mortgage rates aren't
doing much to spur sales so far this year.
As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for
stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat
yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we
do observe economic weakness.
With 25 consecutive years of dividend growth, a
yield over 5 %, the possibility that shares are 7 % undervalued, and the ability to collect «monthly rent checks» without having to actually go out and
do the hard work typically involved with being a landlord, this is a
stock that should be on every dividend growth investor's radar right now.
I was quite surprised to see that those four
stocks didn't beat the high
yield portfolio over the past five years.
Admittedly, during the aggressive quantitative easing measures by the Fed over the past few years, high
yielding dividend
stocks have
done quite well.
Although decades of history have conclusively proved it is more profitable to be an owner of corporate America (viz.,
stocks), rather than a lender to it (viz., bonds), there are times when equities are unattractive compared to other asset classes (think late - 1999 when
stock prices had risen so high the earnings
yields were almost non-existent) or they
do not fit with the particular goals or needs of the portfolio owner.
I don't really worry about
stocks being «overvalued» other than the reviewing P / E; I think price is reflected in the dividend
yield and I'm investing more for income than capital gains.
Non-asset holders were punished — their bank deposits now generate little or no income, and they were forced to move into riskier assets, such as
stocks, bonds, real estate, or «anything that offers some
yield and is not bolted down to the floor» (please see my answer to What kind of market distortions
does the Fed loaning out money at 0 % cause?).
No doubt SE looks like a compelling
stock with a great current
yield but it
does look a bit expensive based on current valuations.
It doesn't help that 10 - year bond
yields are still lower than the prospective operating earnings
yield on the S&P 500 (the «Fed Model»), not only because the model is built on an omitted variables bias (see the August 22 2005 comment), but also because the model statistically underperforms a simpler rule that says «get in when
stock yields are high and interest rates are falling, and get out when the reverse is true.»
Question: when you say «I
do make exceptions and own both higher and lower
yielding dividend
stocks», why
do you generally steer away from dividends higher than 5 %?
This high risk fund
does not require a initial public offering (IPO) so the
stocks are offered to a selected group of investors that are seeking a high - risk, high -
yield investment.
It's not fool proof, but I just don't need the risk anymore that come with high
yielding stocks (6 % +).
When the spread between the 90 - day and 10 - year Treasury
yield is 121 basis points or more, the
stock market
does much better than when it's 120 basis points or less.
If the 10 - year
yield stays at this level, then, according to our indicator, we don't have to start worrying about
stocks until the 90 - day
yield gets over 1 %.
It was
done by an intern of mine who is very highly qualified and it was written in July of 2004 titled, An Investigation into the Relationship between Changes in
Yield Curve and the Performance of
Stock Indices.
Yet, I
do make exceptions and own both higher and lower
yielding dividend
stocks.
I
do think there is merit in looking at general rates (we likely won't return to the rate environment of the early 1980's for example), but I wouldn't be getting excited about
stock prices at these levels for the sole reason that bond
yields are really low.
The problem I've always had with the
stocks vs bond
yield argument is that if rates rise, the whole thing doesn't make sense.