Income-starved investors to pile into higher-yielding options, like municipal bonds, utility stocks, corporate bonds and dividend-growth stocks. These are all good choices, of course. But here’s where the death spiral comes in: the rush into these investments has dragged down their dividend yields (because you calculate yield by dividing the annual dividend by the current share price), sending investors into even riskier areas of the market. The pain is obvious in dividend-growth stocks. Yields have plunged to less than 2% on many of the most popular ones, while their price-to-earnings (P/E) ratios have soared. That’s because these companies’ stock prices are racing ahead of their earnings, which have been hobbled by the slow global economy.
As those stock prices continue to race ahead, the risk gets higher—and the size of a potential drop gets bigger when they eventually correct. The trigger could be a surprise dividend cut, or even slowing payout growth. In fact, the latter is already happening. According to S&P Dow Jones Indices, US companies collectively increased their dividends by $6.0 billion in the third quarter. Sounds great, right? Too bad that number has plunged from the $7.3 billion in hikes announced in the second quarter—not to mention the $10.0 billion of increases rolled out in the third quarter of 2015. Here are four dividend growers I see as particularly risky now: Bank of America Corp (BAC), Citigroup Inc (C), Visa Inc (V) and PetroChina Company Limited (ADR) (PTR).
Source: InvestorPlace
Related Articles:
- 10 Stocks That Have Paid Dividends For Over 100 Years
- Love People, Use Dividend Stocks
- We Were Dividends, Before Dividends Were Cool
- 7 Dividend Stocks Delivering The Secret To Success
- 5 Low-Risk, High-Yielding Dividend Stocks
4 Dividend Stocks You Need to Sell Now
Posted by D4L | Thursday, December 15, 2016 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Popular Posts Last 30 Days
-
The fact is that there are many interesting high-yielding companies that have good long-term prospects. Besides, as the markets get more vol...
-
A common measure of dividend sustainability is the payout ratio, the percent of earnings that are paid out to shareholders. Unfortunately, e...
-
Part of the joy of investing is seeing your good investments continue to grow, years after your initial purchase. Aside from the financial s...
-
Some investors — usually referred to as income investors — specifically set out to buy securities that pay them even before stock price appr...
-
A lot changes when you shift from working to retirement, including how you invest. Most investors switch from building a nest egg to living ...
-
Good income investments often come with strong dividend yields, delivering income that's higher than an investor could find at a bank or...
-
Last month we wrote about the top four companies in our model portfolio in the article 4 Dividend Dominators for 2021 - Companies With More ...
-
Both of the listed stocks are often discussed on the Reddit page, and for very different reasons. The former pays a frequent special dividen...
-
When it comes to dividend stocks, investors can fall into the trap of focusing on dividend yield over all else. That can be a dangerous stra...
-
Safety and tranquility are both important aspects of investing for retirement. Yes, we want stocks with meaningful upside. We also -- howeve...

0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.