There is a running argument regarding whether or not dividend paying stocks are interchangeable for bonds. The pro-bond side argues in favor of the stability of bond prices and the predictability of bond interest. The pro-dividend paying stocks side argues in favor of the potential for increasing dividend income coupled with possible capital appreciation. In the end, it all comes down to the question of risk versus reward.
Investor attitudes regarding owning stocks today, dividend paying or otherwise, is very poor. We believe this is due to the fact that equities, to the exact opposite of bonds, have gone from being very expensive to becoming inexpensive or at least reasonably priced today. Since calendar year 2000, common stocks in general have been awful investments providing little or no return to their investors. We argue that these bad results can be blamed almost totally on overvaluation.
Source: Seeking Alpha
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