Steven Cress, Head of Quantitative Strategy at Seeking Alpha, discusses the benefits of investing in dividend stocks in a sliding market, including stability, reliable yields, and protection against inflation and market volatility. He also emphasizes the potential for capital appreciation compared to treasuries and highlights the importance of strong fundamentals and dividend metrics when buying stocks during a seasonally good period.
Investors should prioritize dividend growth and safety over chasing high yields.
Market downturns provide an opportunity to buy dividend stocks with strong fundamentals and good dividend safety metrics.
Deep dives
Importance of Dividend Growth and Safety
In this podcast episode, the guest Steve Kress discusses the importance of focusing on dividend growth and safety when considering investing in dividend stocks. He warns against chasing high dividend yields, as it can indicate higher risk and potential problems with the company's fundamentals. Kress highlights the significance of dividend safety grades, stating that owning stocks with a grade of A+ to B- has averted 99% of dividend cuts since 2010. Conversely, stocks with a grade of C+ to F had a 93% chance of experiencing dividend cuts. He emphasizes the need for investors to prioritize dividend growth and safety over simply chasing yields.
Opportunity for Stocks in the Current Market
The episode also covers the current market landscape, including the impact of a sovereign bond sell-off and high oil prices on stocks. Kress expresses his optimism about the market and considers the October period an ideal time for buying stocks. He highlights that market downturns present an opportunity to purchase dividend stocks that have also experienced a decline in prices. Kress recommends focusing on companies with strong fundamentals, good dividend safety metrics, and dividend growth. He mentions several stocks with above-average yields and quant strong buy ratings, emphasizing their potential for both dividend income and capital appreciation.
Steven Cress, head of Quantitative Strategy at Seeking Alpha, discusses dividend stocks for when markets are sliding (0:25). Focusing on dividend growth and safety, not high yields, and why dividend stocks are still attractive when money market yields are high (3:40). This is an abridged conversation from Seeking Alpha's recent Investing Experts podcast.
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