It’s becoming increasingly difficult to invest in the current environment. Over the last few weeks some of the legends of the investment business have said this market is too difficult and have subsequently shut down their businesses. It’s no wonder that we’ve seen an increasing demand for bonds and bond related instruments. But that doesn’t mean equities are dead. In fact, Morgan Stanley believes this is a perfect environment for high quality dividend paying stocks. MS believes there is an opportunity here.
An outlook for weak long-term earnings growth that leaves a reduced possibility of P/E expansion, meaning that dividends have to be a dominant part of total returns. Historically a dividend yield of 2% would equate to a P/E multiple of nearly 17x (or alternatively a dividend yield near 3% supports the current market P/E of 14.5x). We do not think a 3% dividend yield is unrealistic. It would require the payout ratio to rise into the low 40% range – a move that would put it back close to the long-term average.
Source: Business Insider
Related Articles:
The Sweet Spot For Dividend Stocks
Posted by D4L | Sunday, August 29, 2010 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
Long-term investors know that dividends can have a major impact on returns over time. When the stock market is struggling to make gains like...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
We decided to go on a hunt for quality stocks that for one reason or another have been buried, and not just this year. We found three incred...
-
Buy and hold ... forever? It's a tall order, but a select few companies are potentially up to the task. You can build a wealth-compoundi...
-
Does the high interest rate environment we're living in have you feeling down? Here's something to remember that can help you turn t...
-
Essentially, we’re looking for more Apples – tech firms with a large market cap (at least $1-billion) and the financial means necessary to p...
-
Dividend stocks can be consistent market-beaters. However, empirical research shows that the best dividend stocks tend to generate better-th...
-
High-quality dividend stocks are always worth loading up on. This is doubly true for companies that offer shareholders an attractive mix of ...
-
Numerous high-quality dividend opportunities are up for grabs at the moment, which may be appealing to some investors given the uncertainty ...
-
Some dividend-paying companies have seen their financials struggle over the years. These companies become vulnerable to dividend cuts which ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.