Equity markets have been regularly hitting all-time highs, and stocks are looking more and more overbought. I've been expecting a correction for a few weeks, but so far no dice -- unless we're seeing the beginning of one now. Regardless of where you think the market is going, you should have some money in equities -- I'd say 40% to 50% of your holdings. And much of that should be in dividend-paying stocks, despite their big run.
For average investors with a moderate risk tolerance, dividend-paying stocks are still the best combination of income and potential capital gains. And, to paraphrase Winston Churchill on democracy, all the other alternatives are so much worse. Take bonds, for instance. The 10-year Treasury note is yielding 2%. High-yield bonds recently yielded below 5%, their lowest ever, and Treasury Inflation Protected Securities (TIPS) guarantee negative returns for the next 15 years.
Source: Seeking Alpha
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