Dividend Stocks Becoming Crowded

If you are currently investing in dividend stocks, have invested in them, or are considering them, you may also be aware that there exists a bit of an “it’s a no brainer to buy dividend stocks” consensus right now in the marketplace. Furthermore, it is very difficult to find someone who is not recommending large-cap dividend payers. It’s hard to blame them, though, as dividends have historically provided a very large percentage of stock market returns… and let’s face it, receiving cold hard cash in the form of a dividend is probably the most investor-friendly way a company can distribute its earnings.

But investors also know, and sometimes forget, that dividend stocks are also about timing (and avoiding the herd), sustainable earnings, and stock price valuation. The average holding period for an investor holding stocks has declined dramatically over the years, as investors have become far less patient (a much needed mindset in buying dividend stocks – think Warren Buffett and his ‘forever’ time frame). As well, long-term investors resolve is sorely lacking for an investment discipline that demands it.

Source: Minyanville

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