Beware: High yielding stocks at historic relative overvaluation


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.

Comments (3)
  • Qniform
    , contributor
    Comments (4568) | Send Message
     
    Yes but dividend investors are only interested in income stream. Why should price matter?
    21 Oct 2013, 08:14 PM Reply Like
  • DwightK
    , contributor
    Comments (19) | Send Message
     
    Good point.
    23 Oct 2013, 04:55 AM Reply Like
  • Qniform
    , contributor
    Comments (4568) | Send Message
     
    It was irony. We all better be interested in price, because events can force sales. It takes a long time in dividends to make up a 15%-20% drop in share price (a fairly common correction).
    23 Oct 2013, 10:52 AM Reply Like
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