Market Pulse: The Great Rotation continues | SierraSun.com
YOUR AD HERE »

Market Pulse: The Great Rotation continues

On Monday The Wall Street Journal ran an article titled, “In Stocks, Payouts Trump Potential.” The author’s point is investors are buying stocks with attractive dividends over ones with good growth prospects. Of course readers of this column have known this for months.

I compared the performance of the Schwab Dividend Equity ETF (SCHD) to 33 sector funds from the iShares family. Over the last three months, the broad-based Schwab Dividend Equity ETF outperformed all but five!

Plus, four of the five sector funds that outperformed were high dividend payers (Utilities, Healthcare, Consumer Goods, and Pharmaceuticals). Biotechnology was the only traditional growth sector that was better.



This is part of the TINA principal — when it come to receiving income from investments, There Is No Alternative to holding dividend paying stocks.

Yes, there are some preferrred stocks that remain attractive, mostly adjustable-rate issues, but receiving good income from the preferred market is difficult.



Nearly all of the bank trust preferreds that served us well for many years have been called. No trust preferreds have been issued, nor will any appear. Dodd-Frank is to blame.

For now and the foreseeable future, macro factors will not be determining stock prices. A need for income will continue to drive them higher. That explains why healthcare, pharmaceuticals and utility stocks have been leading.

One can’t help but be encouraged by the market’s strength in the face of negative news on a few fronts. Never mind “Sell in May…”

It is still a bull market, one as we’ve seen not easily derailed as long as interest rates are low. And better-yielding stocks will continue to be the best bets.

David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.


Support Local Journalism

 

Support Local Journalism

Readers around Lake Tahoe, Truckee, and beyond make the Sierra Sun's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.

Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.

Your donation will help us continue to cover COVID-19 and our other vital local news.

For tax deductible donations, click here.

Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.

User Legend: iconModerator iconTrusted User