Investors: Why Don't You Invest Your Cash On This 7.4% Yielder?

As the market keeps posting new all-time highs every week, it has spread great enthusiasm in the investment community and has made almost all the investors happy with their performance. Nevertheless, the breathless bull market has also caused a problem; it has become extremely hard to identify attractively valued stocks to invest the incoming cash from dividends. Therefore, in this article, I will recommend an attractively valued security to the investors who want to earn an attractive yield on their cash while minimizing their risk.
Most investors reinvest their dividends in the popular Dividend Aristocrats, such as Coca-Cola (KO), Procter & Gamble (PG), Walmart (WMT), General Mills (GIS) and McDonald’s (MCD). However, the problem with this approach is that these stocks have become remarkably richly valued thanks to the ongoing 9-year bull market and the prevailing low interest rates, which have rendered their dividends particularly attractive. To be sure, the above stocks are currently trading at trailing P/E ratios of 25.4, 23.4, 28.8, 22.1 and 25.8, respectively.
These are certainly overvalued levels, particularly given the lack of growth of these stalwarts. More precisely, the first four companies have failed to meaningfully grow their earnings in the last four years, mostly due to their large size and the heating competition in their business. Therefore, investing in these stocks will probably result in poor returns. Investors should also note that these... Read more

Older articles featuring ESV: