Shifting From Bonds To Dividend Stocks

Jeff Layman, chief investment officer at BKD Wealth Advisors, knows how hard it is to find a good yield these days. “You’ve got a bond market that’s finishing a 30-year bull run,” Layman says. “Absolutely what’s happened in the bond markets, with yields coming down so much, has created a challenge.” For Springfield, Missouri-based BKD, with $1.8 billion in assets under management, that has meant both shifting allocations within bond markets and moving them into other asset classes.

BKD is currently examining its equity dividend strategy as an alternative to paltry bond yields. “You can get individual stocks, funds or ETFs to generate yields of 3.25% to 3.5%,” Layman says. “With stocks at pretty reasonable valuation levels, we think buying a portfolio of dividend-paying stocks at 10 to 12 times earnings in many cases offers better yields than you can find in corporate bonds, and you get a tax advantage too.”

Source: Baron's

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