How To Win The Quest For Yield

A plot reminiscent of “The Hunger Games” is playing out for income-seeking investors. In the quest for yield, both dividend-paying stocks and corporate bonds (including lower-rated high-yield issues) have both rewarded investors. Now, like the “kill or be killed” girl and boy leads in the uber-popular film, corporate bonds and dividend stocks are going their separate ways. What’s stirring the crowd?

Dividends. “Yield is a scarce and thus, a coveted asset,” said Michael Hartnett, Bank of America Merrill Lynch’s chief global equity strategist. Many companies are now paying dividends well in excess of their own bond yields. The yield spread of U.S. BAA-rated corporate bonds over the Standard & Poor’s 500 Index dividend yield is near its lowest level in almost 45 years, according to Merrill.

Source: Market Watch

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