Tags: jeremy siegel | investors | dividends | stocks

Jeremy Siegel Predicts Big Shift to Dividend-Paying Stocks

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By    |   Wednesday, 25 May 2016 10:34 AM

Stock-market guru and economist Jeremy Siegel predicts a sea-change in investing in which investors will once again embrace dividend-paying stocks.

"I think we're in the first inning of shifting to dividend-paying stocks," the finance professor at the University of Pennsylvania's Wharton School told CNBC.

"Investors are becoming convinced they're not going to be able to rely on CDs, their bank accounts, or even bonds as a source of income," and may finally include that "maybe they'd better turn to stocks," he said.

"Equities are the major income-producing asset of the future," he said.

"Maybe we'll go back to the period of the '50s and early '60s, when people really did buy stocks for their income-earning aspects, and that was a source of very good demand and very good stock returns," he said.

As for companies stocked with cash, Siegel says they may be painted into a corner.

"Firms don't see a persuasive reason to invest," which is "why you've got dividends and buyback — that's what they're doing with their money."

"But as least they're returning it to the shareholders," said. "Things could be worse."

However, not all economic experts are as optimistic about dividends.

A slowdown in the profit growth rate for the Standard & Poor's 500 index means dividend-payment growth is sluggish, too, "and that could be an issue for income-oriented investors looking at equities for extra yield," US News reported.

The current sluggishness comes after very strong growth following the global financial crisis, says Pat O'Hare chief market analyst at Briefing.com in Chicago. "Until you start to see a pickup in earnings growth again, it's fair to say you're going to see a deceleration in the dividend growth rate," he says.
   
(Newsmax wire services contributed to this report).

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Stock-market guru and economist Jeremy Siegel predicts a sea-change in investing in which investors will once again embrace dividend-paying stocks.
jeremy siegel, investors, dividends, stocks
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2016-34-25
Wednesday, 25 May 2016 10:34 AM
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