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The Wonderful World of Dividend Yields

that should say clean balance sheets

The Wonderful World of Dividend Yields

A very high proportion of returns in range-bound markets have been from dividends. I agree with the above: you need to look at defensive businesses with lean balance sheets and reasonbly low payout ratios (room for earnings downgrades before the yield is compromised) to allow the yield to be sustainable.

Financial stocks, traditionally high dividend payers, in many cases today no longer offer dividends, so income funds will be looking to rotate away from Financials into other strongly-yielding sectors. This is against a backdrop of falling global interest rates, and thus far, reasonbly low inflation, both of which enhance the appeal of good dividend streams.

As a bit of an aside, I'm finding that many covered call writes remain attractive given that volatility in general remains high. Dividends contribute to the returns of covered call write strategies.

In the UK market I like VOD and PSON as suitable yield plays.