Are Dividend Stocks Over Priced?

As we have said here many times, “Save yourself the heart attack of this rollercoaster ride. This is a time when trusted strategies can deliver peace of mind.” And so with all the volatility, the clear strategy was to reduce risk while gaining the best possible return. For this reason, dividend-paying stocks have been attracting investors of all types for their high yields and market-trumping returns. The yields of dividend-payers have dwarfed those of 10-year Treasuries.

But when everyone is preaching the same game plan, there can be some drawbacks. So we must ask: With all their newfound popularity, have dividend paying stocks become too pricey? Investors should focus on companies that are still growing their dividends and not chase yields. “Dividend growers are great inflation protection because that yield is increasing every year,” says Steven Roge, a portfolio manager at R.W. Roge & Company. And if the yield is rising, he says the underlying fundamentals of the company are likely improving, too.

Source: Investment U

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