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.
For further details see:
Good Fishing In The Dividend Stream