Dividends4Life: Bonds for safety is a losing strategy

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Bonds for safety is a losing strategy

Posted by D4L | Tuesday, January 03, 2012 | | 0 comments »

Buying bonds for safety, when so many stocks are yielding such attractive dividends, is a losing strategy, according to George Schwartz, president of Schwartz Investment Counsel Inc., a $1 billion asset management firm. “You've got a lot of good companies selling at throwaway prices and people are still afraid to buy stocks,” he said.

Mr. Schwartz, co-manager of the $210 million Ave Maria Rising Dividend Fund (AVEDX), pointed out that the 10-year Treasury note is yielding 1.9%, while the average dividend yield of the S&P 500 is 2.5%. “It's an anomaly that bond yields are so low, but people still want to buy bonds,” he said. “Meanwhile, with stocks you're not just getting a dividend, you're getting an increasing income stream, plus some capital appreciation.”

Source: InvestmentNews

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