Are We Witnessing A Dividend Bubble?

Given the plethora of market uncertainties, over the past few months investors have started placing an increasing emphasis on dividend yield. In particular, multi-national companies operating in regions or sectors that would enable them to grow dividends over the next few years have gained favor. These so-called 'Dividend Aristocrats' have recorded strong relative performance compared with the benchmark indices, as illustrated by the relative price chart below of the S&P 500 High Yield Dividend Aristocrats Index versus the S&P 500 Index. Click to enlarge: Source: StockCharts.com This trend raises the raising the question: Are we seeing a dividend bubble? I concur with the answer provided from across the pond by David Fuller, co-author of FullerMoney, as follows: The short answer is not yet, but all good trends eventually develop some bubbly characteristics, of a greater or lesser degree. A number of high-yielding, multinational ‘Autonomies’ have shown impressive relative strength this... Read more