Blue-Chip Dividend Growth Stocks A Strong Option For Retirement

There is a confluence of factors that are painting a very odd picture of current investor behavior. Common sense and a careful analysis of the market dynamics between equities and bonds today would indicate that investors should be acting in the exact opposite manner than they are. Interest rates are hovering at a 100-year low, which creates two problems for investors. First, there is not enough return from bonds to fund a retiree’s income needs or to fight inflation. Second, investing in bonds with interest rates so low makes it riskier to own bonds today than it has been in over a century.

Conversely, many U.S. equities, especially blue-chip dividend paying equities with long histories of paying and increasing their dividends are at historically low valuations, and therefore, offering historically above-average current yields. Furthermore, high-quality blue-chip U.S. corporations are perhaps in better financial health than we’ve seen in decades. Consequently, low valuation and healthy corporate financials would indicate that quality equities offer lower real levels of risk and higher long-term returns than they have in decades.

Source: Guru Focus

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