By Scott Ronalds
Investors have had a real love for income and dividends over the past several years. And for good reason – bonds and high dividend-paying stocks have been stalwart performers. But the quest for yield may be leading to imbalanced portfolios. Investors who have loaded up on ‘dividend darlings’ such as banks, pipelines, utilities and real estate investment trusts (REITs), may be missing great opportunities in other industries. Further, valuations for bonds and many income-equities are not as attractive as they were five years ago, especially in relation to other sectors of the market.
In our view, balanced investors should focus on total return first (income, dividends and capital appreciation) and income second. There are many ways to generate an income stream from a portfolio. What’s important is that the stream is not being fed from a drying source.
Tom expanded on this topic this morning on BNN. You can watch the clip here (approx. 8 minutes).