- High dividend yielders are worth it if you know what you’re doing, i.e. you know the sector in detail and understand the macro environment. However in most cases, high yielders are traps with a high risk of permanent capital loss.
- Less risk can be obtained by investing in dividend aristocrats. Most are fairly priced or overpriced, but some still pay nice dividends. The complete list is provided.
- As always, I would look abroad for yield. The dollar is currently strong which makes such investments cheap. A currency reversal will give you higher yields in the future.
Dividend investors have really enjoyed the last three decades as interest rates have been declining. Lower interest rates make stocks that pay stable dividends more attractive while also enabling management to use more leverage to increase those dividends.
You can read more about what to expect from the dividend world here. However, low interest rates also push the price of stable dividend yielders into the sky making new investments less attractive. More →