Tags: Hulbert | dividend | stocks | yields

Hulbert: Best Dividend Stocks Don’t Necessarily Have Highest Current Yields

By    |   Monday, 15 April 2013 08:03 AM

Focusing on comparative yields rather than absolute yields has vaulted Investment Quality Trends to the top ranking of dividend-oriented newsletters among the 200 services rated by Hulbert Financial Digest.

What matters is whether a company’s dividend yield is higher than its past yields rather than whether the yield is higher than that of other companies, according to Investment Quality Trends editor Kelly Wright, Wall Street Journal columnist Mark Hulbert writes.

Over the past 30 years, the newsletter has topped the return of the U.S. stock market, including dividends, by an average of 1.2 percentage points a year, according to the Hulbert Financial Digest.

Editor's Note:
An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

And Investment Quality Trends has taken on less risk while producing that performance.

Meanwhile, the Dogs of the Dow investment strategy, which includes the 10 stocks of the Dow Jones Industrial Average with the highest yields, has generated a 5 percent annualized return during the five years ended March 31, compared with 10.8 percent for Investment Quality Trends.

The newsletter’s portfolio currently consists of Air Products & Chemicals, Archer Daniels Midland, Coca-Cola, ConocoPhillips, CVS Caremark, Occidental Petroleum, PepsiCo, Reliance Steel & Aluminum, Texas Instruments and Walgreen.

Seth Masters, chief investment officer of Bernstein Global Wealth Management, sees some risk in dividend stocks. “Many stocks with high dividends don’t have growth potential. Their payout is their primary appeal,” he tells Bloomberg.

While investors are buying utility stocks for safety, Masters notes, “recently they were trading at a 50 percent premium to their historical average valuation.”

“Most utilities are heavily leveraged, strictly regulated and very sensitive to changing energy costs. That doesn’t sound like a safe investment to me.”

Editor's Note: An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

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Focusing on comparative yields rather than absolute yields has vaulted Investment Quality Trends to the top ranking of dividend-oriented newsletters among the 200 services rated by Hulbert Financial Digest.
Hulbert,dividend,stocks,yields
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2013-03-15
Monday, 15 April 2013 08:03 AM
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