You Won’t Find a Safer Dividend

Everybody and their grandmother is on the hunt for dividend stocks. Thanks to quantitative easing, the yields once found in stalwart bonds are gone for the time being. So grandma and everyone else has been pushed further out on the risk curve in order to replace the dividends lost when bond prices rose. The key for dividend investors, particularly those in retirement, is not treading too far out on the risk curve. For all the talk of high yields from MLPs and BDCs and mREITs, there’s a lot of risk in these names. While some names are safer than others, many of these stocks are tied to interest rates. Even a small rise in rates could harm the stocks.

One area where you can find names that fit the bill are movie exhibitors, like AMC Entertainment (AMC). I’ve always cautioned against investing in pure-play production entities because there’s tremendous risk involved in financing movies. You just don’t know if any one film is going to make its money back and, in fact, they very often do not. Instead, a diversified conglomerate that happens to also produce movies is a safer bet, which is why I own Walt Disney (DIS).

Source: InvestorPlace

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