Beware: High yielding stocks at historic relative overvaluation

|By:, SA News Editor

Dividend stocks have historically worked because of their value tilt, says ace researcher and portfolio manager Mebane Faber. A rash of fund offerings have distorted the asset class though - typically trading at a 20-40% valuation discount to the broad market, high yielders from defensive sectors are now at premiums, and record premiums at that. Buyer beware.

Faber himself runs the actively-managed Cambria Shareholder Yield ETF (SYLD), which adds buybacks and debt repayments to dividends to create a "shareholder yield" from which selections are made.

Dividend ETFs: VIG, FDL, FVD, MDIV, QDF, QDYN, QDEF, DIV, CVY, DVY, HDV, IYLD, PEY, PFM, SCHD, SDY, SDYL, DVYL, VYM, DHS, DTD, SYLD, KBWD, SPHD, DLN, DON, HILO.