I check out Yahoo! Finance at least once every day to see if a new article by one of my favourite authors like Jeremy Siegel, Laura Rowley or Ben Stein has been published and in the process saw an article titled, “Growth Strategy Can Trump Income Investing“. The article begins with a rather sly statement:
The idea behind income investing sounds logical: Buy bonds and dividend-yielding blue chip stocks, and live off the guaranteed income.
The article goes on to suggest a complicated strategy to produce income from growth issues and claims that their strategy produced a 18% gain last year compared to the S&P 500’s modest 3% gain.
Let’s ignore for a moment that evaluating a strategy based on one year’s performance is flawed. The list of dividend-payers that produced the crummy returns is packed with names that are hardly recognizable and the dividend yields range from a 21% to 9.5%. Savvy investors know that stocks that sport a high dividend yield compared to the market are very risky and stay away from them. The article just doesn’t have the data to back its bold claim that dividend investing doesn’t work.
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1 response so far ↓
1 Required // Mar 5, 2006 at 4:44 pm
Doesn’t nonsense like this make you wonder what Yahoo! is trying to achieve with these articles? Half the articles under Yahoo! finance sound more like sales pitches.
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