Should You Worry About A Dividend Stock Bubble

Marc Lichtenfeld: As every investor knows, dividend stocks have been hot for years. Since the market bottomed in March 2009, the Dow Jones Select Dividend Index is up 226%, versus 171% for the S&P 500. And lately, the idea of a market bubble has been gaining momentum. Alex demolished the notion of a broad-market bubble on Friday. I agree completely. Yet questions persist about the prospect of a dividend stock bubble. Perhaps because dividends have outperformed the broader market, some worry that they’re even frothier. Last week, CNBC ran a report about the topic. And we’ve started getting questions in our Investment U Mailbag from concerned members.

Dividend stocks are not in a bubble, no matter what some mainstream media types may try to suggest in order to scare you into watching or reading their reports. I’ll start worrying we’re in a dividend stock bubble when I hear people at dinner parties quoting from my book Get Rich with Dividends and saying dividend stocks are the only way to make money (even I don’t say that). Until then, if you want your long-term portfolio to outperform the market, stick with dividend growth stocks and ignore the bubble babble.

Source: ETF Daily News

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