Patrick O’Shaughnessy has a great piece this month where they touch on a topic that is incredibly important now. We mentioned this back in August where the premium that dividend yield stocks are trading at relative to the market is near the highest ever. Historically when you invest in high yield you are getting a value tilt, but now, as money has rushed into all things high yield, you are actually getting the opposite – not something you want!
Valuations are also cheaper abroad.
Conclusions?
1. In the US avoid high dividend yield in favor of shareholder yield.
2. Look abroad. (this chart from the summer).