Dividend Stocks That Crush Treasuries

Last week a remarkable event occurred. For the first time ever, the Fed stated it will force low interest rates for a very explicit time–two years. Prior statements have contained vague language about the time period, describing the time frame as “extended.” Suddenly dividend stocks are more attractive than ever now. The reasons are pretty obvious.

There are many stocks out there paying almost twice as much income as the ten-year U.S. treasury. Most of these dividend stocks are easier to analyze because they lack political complexity and rely mostly on traditional stock valuation disciplines. I also think companies have improved their financial operations greatly so that the dividends are sustainable, if not potentially increasing. Even if dividend stocks paid the same as treasuries, I still think stocks are a better play right now. Stocks have more capital appreciation upside with the extra bonus that many pay more than 2.25% dividend yield.

Source: Forbes

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