QVML - Good Fishing In The Dividend Stream

Summary

• Once upon a time, dividends played a starring role in equity markets—until 14 years of easy money whetted investors’ appetite for risk and created a massive tailwind for unprofitable, long-duration growth stocks.
• Valuations appear to be attractive: Stocks yielding north of 2.5% are trading near their largest discount to the equity market in recent memory.
• Dividend payments tend to be less volatile than earnings-multiple expansions and contractions, providing a relatively steady return on investment.
• We believe dividends can be a sign of strong fundamentals because companies that pay dividends have to generate enough cash flow to cover ongoing capital expenditures as well as regular disbursements to shareholders.

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