High-Dividend Stocks Gain Allure as Bond Yields Fall

Investors once again are snapping up high-dividend-paying U.S. stocks as Treasury yields fall, which should keep utilities and telecom stocks near the top of the buying list for the near future. The S&P 500 utility sector, whose dividend yield at 3.9 percent is more than 100 basis points above the 10-year Treasury yield, led the S&P 500's advance on Friday after concern about the launch of U.S. air strikes on Iraq drove the benchmark bond yield to 14-month lows.

The equity market recovered from early losses, in part due to news that Russia's Defense Ministry said military exercises near the Ukraine border had ended. Any global worries that keep a bid in government debt, meanwhile, will motivate investors to go after stocks with fat dividend yields. "Where yield lies is where investors are continuing to go because there continues to be no alternative from other income-producing securities," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Source: Money News

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