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High Dividend Yields Don't Equal High Returns

Published Wed, 30 Jan 2019 04:54:32 -0500 on Seeking Alpha

Today I'm going to war. I'm taking my double-sided axe and putting my mean face on. I will need the warrior spirit because I'm about to tackle one of investing's sacred beasts: high dividend yielding stocks. Dividend investing is quite popular among income-seeking investors. If you intend to live off your portfolio revenues, what could be better than picking high dividend yield stocks and never touching your capital? Imagine a portfolio yielding 7-8%. That means you would *only* need between $500K and $600K in the market to retire without any stress. But behind their friendly faces, high dividend yielding companies hide a terrible truth. I'll share it with you, but first, let me tell you what I consider a high yield stock.
High-Yield Stock Definition The definition of a high-yield stock isn't the same for everyone and I couldn't find a commonly accepted definition. It seems that each investor, analyst and market has their own idea of what a high yield should be.
First, I think it depends on in which investing era you belong. If you look at the 1980s, I guess a dividend yield of 5% would not qualify as a "high yield." After all, you could have picked bonds and GICs with much more generous yields.
Since we are pretty far away from the 80's yield, let's look at what could be considered a high yield today. The Dividend Guy Blog keeps a list of the dividend achievers. The Dividend Achievers Index refers to all public companies that... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ENBRIDGE 33.62   19.1 1.76 2.24 6.83
AT&T 34.97   14.7 2.38 2.04 5.98


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