A clear-cut case for dividend stocks

“We characterize it as economic post-traumatic stress syndrome,” said David Baskin, president of Toronto-based Baskin Financial Services. “Having gone through the experience of 2008-09, investors don’t want to go through it again.” Nervousness is natural, investors, because there’s a lot we don’t know about what’s ahead. But Mr. Baskin makes a case that what we do know argues strongly for buying high-quality dividend stocks right now.

Research by Mr. Baskin’s firm shows that over the past 60 years, the dividend yield on the composite index has been a little less than half of the 10-year bond yield. Between 1960 and 2007, the index dividend yield never rose above 70 per cent of the interest rate on 10-year bonds. All of these numbers suggest to Mr. Baskin that dividends have never been more attractive, compared to interest rates, than they are today. “Things in the economic world always revert to the mean,” he said. “The mean is not a TSX with a dividend yield that high. It’s so far off the charts, it’s like a black swan event.”

Source: Globe and Mail

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