Dividends4Life: An Alternative To Overvalued Dividend Stocks

An Alternative To Overvalued Dividend Stocks

Posted by D4L | Saturday, November 23, 2013 | | 0 comments »

When I thought about putting together an article on the high valuations and potential for a downslide in dividend stocks, one of the first things I did was ask Google what commentators have been saying on the subject recently. Here's what I got with the search terms "overvaluation dividend stocks" as a first run at it. Top four hits are from Seeking Alpha. The next two pages were articles from places like Fool, Barron's, GuruFocus, CNBC, Morningstar and the like. These put out a general tenor of doom and gloom for dividend stock prices.

It is almost inevitable that we will soon see a downturn for some of the most overvalued dividend stocks, perhaps even as the broader market continues climbing. Some investors will take the approach of "So what? My income is safe because I've chosen well." And, if that's one's only priority, I will concede that it will likely work out for them reasonably well. But, if one is even remotely concerned with preserving or growing the net value of his or her portfolio, it would be, in my opinion, wise to consider what alternative there might be to holding all those overvalued stocks until valuations revert to their means. Doesn't it make more sense to put some of those over-valued gains into other opportunities instead of just letting the market take them back?

Source: Seeking Alpha

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