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Forget About Juicy Dividend Yields

Published Mon, 13 Apr 2020 05:17:07 -0400 on Seeking Alpha

The Fed drives credit spreads even lower.
Income investors are again forced to look for yield in equities.
Seek safety in dividend payers, but not high dividends.
The market of superlatives continues. This past week the rally in risk assets was fueled by another big action by the Federal Reserve. The Fed is moving into the junk bond market and will be buying broadly junk credit. This goes well beyond Financial Crisis era QE, which stopped at Mortgage-Backed Security (MBS) purchases. While the economy may or may not rebound in a V-shape, the credit market apparently will, and income seeking investors in the bond market will be further staved. The chart below of the high-yield ETF says it all. Once again, yield investors will be forced to look for yield in the equity space.

Yield Stocks Are More Than High Dividends
In rough waters, investors value high income-paying investment even more than in normal times. High-yield stocks, especially today with fixed income yield so low, are being sought after as a safe-haven. And logically, investors who panic and need to sell positions tend to dump their dividend-paying stocks only as a last resort, lending a bit more stability to this sector of the equity universe. Demand for yield stocks is also another factor supporting this asset class. Retired investors attach a greater importance to current income and so many are forced (thanks to 0% yields in the debt market) to resort to equity dividend yields to obtain their yield returns. Given the mass of the population, the Baby Boomers, are retired and seeking current income, demand for equity yield is likely to remain extremely high.
We have noticed that in choosing their dividend-paying stocks, more investors consider first and foremost the dividend yield that the stocks pays. In this article, we argue that the dividend yield is the LAST criteria yield-seeking investors should consider. In fact, at WMA, our quantitative yield scores, calculated for all 5000+... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ENLINK MIDSTREAM LLC 8.17   0.0 -0.78 1.13 13.79
ANWORTH MORTGAGE ASSET 3.39   0.0 -0.98 0.44 13.17
MACY'S 17.00   5.2 3.29 1.51 8.83
MOELIS & COMPANY 34.79   16.4 2.12 2.00 5.82
MEDLEY CAPITAL 2.61   0.0 -1.62 0.15 5.81
PROVIDENT FINANCIAL 20.89   36.0 0.58 0.56 2.75
LAKELAND FINANCIAL 45.57   13.7 3.32 1.20 2.70
INFOSYS 11.68   22.9 0.51 0.28 2.41
HACKETT GROUP 16.63   27.7 0.60 0.36 2.20
PETROLEO BRASILEIRO 14.71   11.9 1.24 0.31 2.11
WAL-MART STORES 116.92   26.3 4.44 2.12 1.83
AO SMITH 51.71   20.8 2.49 0.88 1.77
KAMAN 63.35   33.9 1.87 0.80 1.32
DYNAMIC MATERIALS 45.24   12.9 3.51 0.50 0.17
RADIAN GROUP 23.55   8.2 2.86 0.01 0.04
GLOBAL PAYMENTS 168.03   54.9 3.06 0.04 0.02
CBOE 115.06   0.0 0.00 0.00 0.00


Older articles featuring Pennsylvania Real Estate Investment Trust (PEI):
6 Reasons To Ditch High Yield REITs
Fun With COVID: My Dividend Growth Portfolio In 2020
Phoenixes Rising: 3 Future High Yielders
Dividend Cuts And Overdue Rent: REIT Earnings Recap
It's 'Still' Not The Time To Be A High-Yield REIT Investor
Dividend Cuts And Overdue Rent: Previewing REIT Earnings Season
Dividend Cuts And Overdue Rent: REIT Earnings Recap
Whether The The Great Reach For Yield Experiment Has Failed
Our High Yield REIT Portfolio - Optimizing Rebound Potential
Now Is Not The Time To Be A High-Yield REIT Investor