Is The Dividend Trade Too Crowded?
- Posted by JC Parets
- on April 19th, 2012
It’s Chartapalooza this week at Chelsea Piers here in New York. I’ll be spending most of Thursday and Friday at the Market Technicians Association’s Annual Symposium. If you couldn’t make it this year, I definitely recommend joining us in 2013.
Meanwhile, this chart of High Yielding Stocks compared to Lower Yielding Stocks caught my attention. The question here is whether or not this higher dividend paying trade is getting a bit crowded:
Sam Burns at Brown Brothers Harriman:
“These metrics suggest that the heavy investor interest in high-yielding stocks has stretched their relative valuations compared to historical norms,” Burns says. “This does not necessarily imply high-yield stocks will underperform soon, as valuations can remain extended for long periods, but may raise the risk of using dividend yield alone as a stock selection strategy.”
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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