Dividends4Life: Are 2-3% Yields Just Too Low?

Are 2-3% Yields Just Too Low?

Posted by D4L | Tuesday, May 21, 2013 | | 0 comments »

This article is a response to a comment to our prior article that is a fairly common point of view. We think the view is potentially dangerous and deserves a rebuttal. The commenter said: "When discussing dividend stocks, 2-3% is just too low. Not talking about risky high fliers that pay 10% +, just stocks, ETFs, and funds that pay enough to live on, say 4-8%. There are plenty of them, why discuss 2-3% payers?"

We generally disagree with the assumption behind the commenter's question. There is not a significant number of equities with 4% to 8% yields that are also high quality, low volatility and consistent dividend growers (nor that have bullish analyst ratings) - all of which we consider to be highly desirable. If an investor seeking to live on dividends selects 4% to 8% yield stocks, that investor (based on history) will not find the income to reliably and consistently grow, and will not be able to find many instances of that level of income among equities with low volatility price and high quality characteristics.

Source: Seeking Alpha

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