The economy is dragging. It may be time to look at the next 10-15 years instead of the next 10-15 months. To do this, look no further than companies that pay dividends higher than the return in the credit markets; they're attractive because of record-low interest rates, potential profit growth of 36%, and a slowing economy. According to Bloomberg, US stocks paying dividends are exceeding bond yields more than any time in the last 15 years. In the S&P 500, 68 companies yield more than 3.78%, which happens to be the average rate in the credit markets going back to 1995.
Moreover, stocks seem cheap after companies raised payouts by 6.8% during the second quarter. Bloomberg goes on to report that the last time the number of S&P 500 companies paying dividends above the corporate bond rate approached this level was all the way back in March 2003, which happens to be around the time a new bull market started that saw more major equity averages double.
Source: Minyanville
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