Dividends4Life: Should You Avoid Financial Dividend Stocks?

Should You Avoid Financial Dividend Stocks?

Posted by D4L | Sunday, October 16, 2011 | | 1 comments »

Dividends are en vogue these days, and with good reason. After a decade in which investors have seen little in the way of capital gains, cash dividends ensure that they see a return that is not entirely dependent on the whims of the market. Moreover, the companies that pay dividends tend to be less volatile than those that do not. And given the paltry yields on offer in the bond market, investors can hardly be blamed for running to high-dividend stocks instead.

WisdomTree’s explicit focus on the absence of financial stocks in DTN is telling. The 2008 meltdown was first and foremost a banking crisis, as is the festering European sovereign debt crisis. Investors want to know that the dividends they depend on are safe. Virtually all banks slashed their dividends during the 2008 crisis, and investors fear it will happen again. Alas, I fear that this is another case of closing the barn door after the horse has already bolted.

Source: Guru Focus

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1 comments

  1. Financial Independence // October 17, 2011 at 4:40 AM

    I think financial sector is making handsome profits, it is their overheads are to high - the salaries, bonuses are not performance related.

    Even during severe crisis and under performance they kept pocketing nice checks. This keeps me away from investing into them.

    It is a self consuming machine : -)

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