Investors are starved for yield. It’s not exactly breaking news. With traditional savings vehicles such as savings accounts, CDs, and bonds yielding next to nothing, investors have been flocking to dividend-paying stocks for years. On the surface, this makes all the sense in the world. Unlike fixed income investments, dividend-paying stocks tend to enjoy rising payouts over time (or at least they do if you choose them well).
There‘s just one problem with this. Defensive, dividend-paying sectors are, as a group, expensive relative to the broader market. Investors are paying a premium for slow growth…which is not exactly a recipe for long-term investment success. Surprisingly, some of the best dividend deals on offer are in the tech sector. Microsoft (MSFT), Intel (INTC) and Cisco Systems (CSCO) yield 2.8%, 3.7% and 3.2%, respectively, and all trade at very modest valuations. All have also been aggressively raising their dividend in recent years.
Source: Guru Focus
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- 10 Dividend Stocks That Gave Me A 20%+ Annualized Return
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