Dividends4Life: Dividend Stock Bubble?

Dividend Stock Bubble?

Posted by D4L | Saturday, May 26, 2012 | | 0 comments »

n the past 15 years we have witnessed the euphoric ­inflation and violent bursting of two asset bubbles in the U.S.: the new-economy tech stocks in 2000 and the structured ­financial instruments that fueled the U.S. housing boom in the late 2000s. The aftermath of these bubbles ­destroyed an enormous amount of wealth at the precise moment the baby boomer generation began to prepare for retirement.

Many of these investors have stampeded into lower-risk assets, including bonds and income-oriented equities. Now we are beginning to hear murmurs that these former safe havens are “crowded trades”: the new bubbles. In the case of dividend stocks, nothing could be further from the truth. A crowded trade is one with many investors, a small number of available shares and poor liquidity. Do global dividend stocks fit the bill? Without question there are more investors in dividend stocks today than there were a year ago. But according to TrimTabs, fixed-income funds are still where the money is flowing, not equities.

Source: Forbes

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