Everyone loves dividends but in recent years the darlings of the stock market have been growth stocks with their outsized returns. Why buy a stock paying 3 to 4% dividend, that does not have much upside potential in capital appreciation, when you can buy a growth stock with high potential of price appreciation but paying no dividend? On the surface it makes since to stay with growth stocks.
However, there is one thing you can say about the stock market that’s always true, and that is it is ever changing. We have had a long period of investors favoring growth stocks, much longer than normal. We also are expecting the Federal Reserve to start lower interest rates fearing a slowing economy. Evidence is building that value propositions in the stock market are becoming more and more attractive.
Maybe you shouldn’t give up on growth stocks just yet but transiting more to value appears to be a sound strategy.