Have No Fear; You Can Always Hide in High-Dividend-Paying Stocks

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Investors are piling into income-generating stocks at the fastest pace seen in decades. In the second zero-rate environment created by the Fed over the last decade, JPMorgan's Michael Cembalest brings attention to the frenzy of demand for income from 'safe' stocks. This has led to a rush into income-producing stocks (e.g., ones that pay high dividends).

As shown in the accompanying chart from Mike Goldstein at Empirical Research, the P/E ratio of the highest dividend payers is at a record valuation premium compared to the P/E of the broad market. Of course, this will not end well; as the constant apples-to-unicorn comparison of 'risky' stock dividend yields to risk-free Treasury yields (risk-free in terms of capital return – no matter what your view on inflation/default) that we have pounded the table (here and here most recently) about remains a stock-seller's commission-maker's portfolio-manager's stock-broker's dream.


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  1. Perhaps the author or the blurb doesn’t either.

    Ver poor writing.

  2. Are you defining highest quintile of dividend payouts as the top 20% of companies paying ‘absolute yield versus the average yield of dividend paying stocks’ or as the top 20% of shares that pay ‘the highest percentage of their net earnings out as dividends’ [also called- the payout ratio]?

    The chart and/or your article do not makes this clear.
    It’s a major difference.

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