Dividend Payers Experience Multiple Expansion At Low Nominal Interest Rates

By Bear Fight:Retirees focused on generating yield from their savings have sought dividend-paying U.S. equities as short-term rates remain low. Retirees looking to protect their portfolio from dividend cuts should review a company’s payout ratio to assess the health of its dividend. Unlike fixed-income securities, dividend-paying equities can experience cuts to dividends due to falling earnings.

By Dividendinvestr:Investors seeking yields higher than those offered on bank savings and fixed-income investments such as bonds have gravitated towards stocks of stable dividend payers as a source of investment income. However, some investors buying dividend equities for income tend to focus on the dividend yield alone and often pursue the companies that pay the highest yield.

By Bear Fight:Retirees focused on generating yield from their savings have sought dividend-paying U.S. equities as short-term rates remain low. Retirees looking to protect their portfolio from dividend cuts should review a company's payout ratio to assess the health of its dividend. Unlike fixed-income securities, dividend-paying equities can experience cuts to dividends due to falling earnings.

Chuck Carnevale submits:As the baby boomer generation approaches their retirement years, their thirst for income-producing investments is extremely high. Finding quality investments that produce enough income to meet their retirement needs is a challenge. Fixed income investments, historically an important component of a balanced investment portfolio, are producing disappointing and even inadequate yields.

David I. Templeton submits: The average return of the dividend paying stocks in the S&P 500 Index outperformed the non dividend paying stocks in 2010. The dividend payers returned 18.75% versus 16.24% for the non payers in 2010. Given the attractive valuations and yields for many dividend paying stocks, especially compared to fixed income yields, outperformance of dividend paying equities has a high likely to continue in 2011.

Philip Mause submits: I have been continuing my analysis of the relationship between prevailing interest rates and reasonable equity valuations. There are a number of metrics used to determine whether the "market" is over- or under-valued; some of the metrics ignore interest rates; others give them a central role.

David I. Templeton submits: Although the month of August saw the average return for the dividend payers in the S&P 500 Index trail the non-payers and the S&P 500 Index as a whole, on a YTD and 12-month basis, the payers continue to outperform. On a year to date basis, the average return of the payers equals -.62% versus -3.41% for the non payers. On an average return basis, the payers and non payers are outperforming the market cap weighted S&P 500 Index.

David I. Templeton submits: The dividend payers in the S&P 500 Index continue to generate strong performance through the month of July. On a year to date basis, the payers are outperforming the non-payers 4.53% to 1.46%, respectively. For the 12-month period, the payers are outperforming both the non-payers and the S&P 500 Index.