The following is an excerpt from Dan Kadlec | July 24, 2012 | Time.com |
Dividend stocks are leading the market and some pundits believe the rally is a bubble about to end badly. But they may be underestimating the flood of income-starved retiree money heading this direction in a record low-yield environment.
Dividend-paying stocks have been on a tear, and if you believe the experts it has all gone much too far. We are now in yet another bubble, this one comprising just about any stock with a yield. Look out below.
Certainly, there is reason to take notice. In the last three months, traditional dividend-paying industries including telecom (13.7%) and utilities (7.5%) have far outperformed the broad S&P 500 (-1.2%) and individual sectors like materials (-3.4%) and financials (-5.4%). The Wall Street Journal reports that dividend-payers are now valued in the market at 25% more than non-dividend payers.
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And the money keeps rolling in. From The Journal:
“Investors have plowed a net $16 billion into U.S. dividend equity funds since the beginning of the year, with inflows picking up in recent weeks. By contrast, some $25 billion has been withdrawn from non-dividend funds, says data tracker EPFR Global.”
To read more visit: Time.com