Press Releases

Are dividend stocks the new bonds? 

In an era of low bank CDs and bond interest rates, we have been increasing our allocation to high quality dividend stocks or “bond like stocks” while reducing our investments from CDs and bonds. This strategy is especially attractive when the dividend yield of the S&P 500 is higher than the bond yield on the 10 Year US Treasury bond (see chart below). 

Where is the yield? Stocks versus bonds… 

Sign Up for E-News

 

 

 

 

 

 

 

Institutional Approach

Institutional investors (pension funds) invest into securities (stocks, bonds and CDs) for income and appreciation. In the short and near term, they prudently meet their liabilities to pay their retirees with the income they earn from securities. They are indifferent to whether the income comes from a security that is a stock, bond or CD if they are of equal quality. From the mid 1970s to 1982, institutional investors invested more into CDs and less into stocks and bonds as interest rates were high and rising. From 1982 to now, institutional investors have shifted out of CDs to both bonds and stocks (declining rates make their yields more attractive). From early 2009 to now, they have rotated into dividend yield stocks and away from bonds, especially when the S&P 500 yield exceeded that of the 10 Year US Treasury. 

Publicly listed corporations are also institutional investors. When dividend yields are higher than bond yields, like now, they refinance their liabilities (debt and stock) by issuing lower yield bonds and buying back their higher yielding stocks. US corporations saved a lot of money this way and it explains why they have been big buyers of their stocks since 2009. 

Don’t compromise on quality when investing for income… 

Stocks and bonds have different quality ratings. These ratings focus on the ability of the issuers to pay interest/dividends and the principal upon maturity for bonds (for stocks, this reflects the avoidance of bankruptcy and the potential for stock price appreciation). Individual investors investing for income have a hard time monitoring credit trends, credit spreads and end up taking abnormally high risk. Too often I have seen them buy excessively high yield stocks or bonds only to lose most, if not all, of their original investment. The highest yields often reflect declining financial health rather than a good investment opportunity. 

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Chatham

Upcoming Events

Fri, August 10, 6:00 PM

Museum of Early Trades and Crafts, Madison

Downtown Concert Series: Mama D & The Vexations

Arts & Entertainment

Carousel_image_8ab0795d7266f1cbd501_9f7a7a4ff4becf97e74c_regwalk_skyrw_9.30.18_email-1

Sun, September 30, 8:00 AM

College of Saint Elizabeth, Morristown

Walk to Fight Alzheimer's

Giving Back Health & Wellness

A Week at the Library of The Chathams Monday, July 9 – Sunday, July 15, 2018

Please note that the library will be closed on Sundays now through Labor Day weekend

PROGRAMS AND EVENTS

Our summer program is in full swing.  This week we are starting some of our most popular children’s programs, Chess for Kids and sewing classes with Miss Polly.  Children will also enjoy a visit from a special guest, Queen Maria Isabella from Medieval Times.  Teens ...

Longtime Chatham Resident Passes the Torch to Current Residents

July 13, 2018

To the Editor,

I moved to Chatham from Ohio in 1961 and left just over a year or so ago. My daughters went through the school system and one of them still lives there with her son.

Clearly, we found the Library and local educational opportunities to our liking. 

When it came to giving back to the community, I chose to support the Library and served as a Board member for 15 ...

AtlantiCast

AtlantiCast: Episode 18

On this week’s AtlantiCast, you’ll find out how accessing care at Atlantic Health System is now easier, more affordable and closer to home than ever, learn which item from the produce aisle could be the newest weapon against cancer, see what Atlantic Health System, the New York Times and Instagram all have in common and much more.

 

 

Video: Point View's Petrides Talks Netflix's Cash Burn as Company Reports Earnings

July 16, 2018

Point View Wealth Management's Managing Director and Portfolio Manager, John Petrides, live on Cheddar.com discussing Netflix's earnings report and why the streaming service should dilute shareholders to plug its cash burn.

cheddar.com/videos/netflix-earnings-preview

​​​​​​For more than 25 years, Point View Wealth Management, Inc. has been ...

5 Simple Ways to Save Water this Summer

According to the L.A. Times, the average American uses an estimated 98 gallons of water EACH day.  

Here are five simple ways you can save water, to help you conserve water this summer and take some pressure off of your drains.

1. Unless you are using it, turn the faucet off. How many of us still leave the water running while we shave or brush our teeth?According to ...