When you look at dividend returns on equities versus bond yields, to me it's a pretty easy decision to be heavily in equities.
Sentiment: POSITIVE
Owning equities is an essential part of anyone's portfolio. You just can't ignore it over time. It's going to add the real pop to anyone's overall performance.
If you are an investor who's retired and hopes to live off the income that your portfolio is generating, then we would focus just on the dividend yield.
An investor in Duke Energy is expecting a dividend payment. That's roughly 70 to 75 percent of the earnings I produce. The business that goes with that level of dividend is a business that has more predictability, more stability.
Income-producing unit trusts are brilliant because if you can accept capital values will be volatile for a while, your dividend income will always be higher than what you get in the bank.
I personally have said many times I'd be a hundred percent in equities. That fits my risk profile and my views of the world, though obviously it's not appropriate for everyone. Most investors need a more diversified portfolio.
You've always got to think about having some fixed income in your portfolio as well as equities.
Both from the standpoint of stocks and bonds, an investor wants to go where the growth is.
Simply put, investors should own less equities, more bonds, more global investments, more cash and more dry ammunition.
I think it's a mistake to rely too much on any one economic factor. It's why investors try to spread their portfolio round.
Having different types of stocks in your portfolio can enhance returns.
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