cstauffer

Are High Dividends Sustainable?

To all of you "oldsters" I would not recommend short-term trading. To the person who looks at equity investing as "loaning the company money", that is bond investing not stock investing. Don't take equity risk in order to get a bond like return. If you want income invest in a bond fund or buy individual bonds. Buying bonds earlier this year, particularly corporate bonds, would have provided you yields to maturity of between 7% and 12% in very high quality companies. If you are buying equities, buy them for their total return over a 3 -5 year period or longer. Buy dividend paying stocks with a history of an increasing payout ratio and buy the stocks at a low relative P/E. Another way to own equities with a good total return is to purchase a closed end or open end fund which owns dividend paying stocks and combines that strategy with covered call selling. Many of these funds are throwing off annual yeilds between 8-10% and you still have opportunity for appreciation.