Dividend Stocks Pay Off

The risk-off trade has not only focused attention on the bond market, but also dividend investing. Since dividends are often associated with defensive strategies, it is no surprise that the desire for income is getting more attention these days given the recent market volatility. “Economic uncertainty has helped to push bond yields and stock prices lower, to the point where dividend yields are now in excess of bond yields,” said Myles Zyblock, chief institutional strategist at RBC Capital Markets, highlighting the 10-year Government of Canada bond

This has only happened one other time in the past 30 years, near the depths of the financial crisis in 2008-2009. The income provided by dividend-paying stocks does tend to lower a portfolio’s performance variance, Mr. Zyblock told clients. However, he recommends a dividend-based approach in most environments as it has proven to be effective through a variety of market scenarios, over time, and across countries.

Source: Financial Post

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