Even fans of dividend-paying stocks acknowledge that they're looking riskier, a result of their own success. Dollars are pouring into stocks of utilities and other companies that make regular payouts to shareholders, because they're at the center of a few investment trends. Investors are not only hungry for income, given the low interest payments bonds are offering — they want investments that will hold steady when markets are shaky.
The rush has pushed up stock prices for dividend-paying companies faster than their earnings, which has sparked concerns that they're too expensive. Southern, the company behind Georgia Power and other utilities, trades at close to 18 times its expected earnings per share over the next 12 months, for example. That's above its average of 15.4 times over the last decade. Scott Davis, who runs Columbia's Dividend Income mutual fund, hears the criticism. But he says that while dividend-paying stocks may be pricier than before, they still look better than other alternatives. Answers have been edited for clarity and length.
Source: TRIB Live
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