Here is a different perspective on dividend yields.
Most investors consistently look at the current dividend yields on their holdings. While I keep an eye on the current dividend yield, I also pay attention to the dividend yield on my purchase price. Why? Let me give you an example.
I bought NEE in 2012 at 63.23. Today, the dividend is 3.71 and yesterday's price was 148.57. At today's price, the current yield is 2.5% but my purchase price yield is 5.9%. Furthermore, the earnings are 8.73 which means the PE on my purchase price is 7.2 versus the current PE of 17.
Where else can you get a safe yield of 5.9% in the current market and have a nice margin of safety (PE 7.2 vs. 17)? Unless their financial fortunes change significantly, there is no reason to sell. Sure, the market could go down and dividends could be cut, but why get rid of a nice returning investment with minimal risk?
The point is that long term investing really "pays dividends" and mitigates risks. You don't want to always be switching to a prettier girl when you have a great one already!
