Dividends4Life: Are Dividend Stocks the Market's Riskiest Investment?

The conversation about a "dividend bubble" began in earnest at the beginning of last year. As my colleague Morgan Housel said in February 2012, "there's an argument to make that, just as investors ran blindly into subprime bonds five years ago in search of yield, they're running blindly, carelessly into dividend stocks today." So where are we now? Has the bubble popped? Has it deflated? Was it much ado about nothing?

According to Seth Masters, the chief investment officer of Bernstein Global Wealth Management, things have gotten worse. In a recent report from Bloomberg News titled "Desperately Seeking Safety," Masters argues that the "asset classes investors now consider safe havens -- gold, bonds, and dividend-paying stocks -- are dangerously overpriced." The bottom line here is that a flight to safety may not, in fact, be a flight to safety at all, assuming that these valuations will ultimately come back to their historical norms.

Source: Motley Fool

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