Good article in Barrons this week from the "Speaking of Dividends" column.
With the bond yields at such low levels and the yield curve flattening, many bond investors are migrating to stocks to capture the higher yields.
I always caution investors against reaching for high dividend yields. While high dividend yields can seem enticing, it pays to take the time to "peel back the layers" of financial fundamentals. Always remember that dividends are discretionary and do not represent the same legal obligation as bond payments . Dividends are decided upon by a company's board each time they are paid and can be eliminated or cut.
In the article, one item I think bears a little more in-depth digging - Y/Y EPS growth. You need to look closely at the quality of earnings and the context as to why the earnings are what they are. Just taking the EPS as presented by management in a limited sense could be misleading.
Watch your step and be careful. Tomorrow we are in the ides of September and October. Hail Ceasar!
