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Bill Gross: Buy Dividend-Paying Stocks to Survive Slow Growth

Bill Gross: Buy Dividend-Paying Stocks to Survive Slow Growth
Bill Gross (Mark Wilson/Getty Images)

By    |   Tuesday, 15 October 2019 02:12 PM

One-time "bond king" Bill Gross is warning savvy investors to beware of slow growth and sluggish markets.

To survive such a treacherous investing environment, he recommends dividend-paying stocks over negative-yielding debt.

In his first investment outlook since retiring in March, Gross said on Tuesday that with trillions of dollars in debt offering negative yields, investors should be holding stocks that promise secure dividend payouts, the Financial Times explained.

“In the absence of substantial fiscal stimulation, the economic and asset boost from negative interest rate yields may have reached an end,” he said in a commentary on his website.

“Prepare for slow economic growth globally and an end to double-digit market price gains of months and years past. High yielding, secure-dividend stocks are what an astute investor should begin to own,” he said.

Gross said further upside in equity markets is limited, because central bankers were “becoming wise to the negative effects of rates at zero (or less) that literally rob small savers and larger financial institutions such as banks, insurance companies and pension funds of their ability to earn historically ‘guaranteed’ carry,” he wrote.

Gross, once the bond market’s most influential investor, earlier this year retired from Janus Henderson Group Plc, ending attempts to reclaim the stature he enjoyed leading the world’s largest fixed-income investing firm.

Gross, who turned to investing after serving as U.S. naval officer, co-founded Pacific Investment Management Co in 1971, attaining rock-star status in investing circles as he attracted hundreds of billions of dollars in assets, Reuters reported.

Under his watch, Pimco blossomed into a $2 trillion asset-management powerhouse, one so influential that the U.S. Federal Reserve tapped it to help implement its program of emergency bond purchases in the financial crisis in 2008.

At Janus, however, Gross was unable to repeat his earlier success, with the performance of the fund he managed ranking near the bottom. Gross told Reuters on Friday that low rates are distorting returns.

His tenure at Pimco ended abruptly and acrimoniously in September 2014, when he was ousted. His flagship Total Return Fund — which hit a peak of $292.9 billion in assets in April 2013 — was hemorrhaging assets. At the end of April 2015, the Pimco Total Return Fund had lost its title as the world’s biggest bond mutual fund to the Vanguard Total Bond Market Index Fund, which had $117.3 billion of assets.

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One-time "bond king" Bill Gross is warning savvy investors to beware of slow growth and sluggish markets.
bill gross, dividend, paying, stocks, slow, growth
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2019-12-15
Tuesday, 15 October 2019 02:12 PM
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