The leadership of high-yielding stocks is far from over because the group is the least liked by fund managers while poised to gain popularity among a growing population of aging Americans, Bank of America Corp. said. Utilities and phone companies, which offer the highest dividend yield among the Standard & Poor’s 500 Index’s 10 industry groups, are owned by mutual funds in the smallest proportion relative to their weighting in benchmark indexes, according to data compiled by Bank of America. Portfolio managers are likely to be forced to raise holdings of those shares as earnings growth slows and more Americans favor stable returns, analysts led by Savita Subramanian wrote in a note dated Sept. 28.
“We’re still in the early stages of building interest, given that dividend yield still remains a somewhat underutilized investment theme,” Subramanian said. “When profits growth grows scarce, investors tend to seek out companies with stable earnings and avoid companies with volatile earnings growth. Companies with strong and stable dividends generally align with this theme.”
Source: Financial Advisor
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