Hickman: The case for quality high yield stocks

Hickman: The case for quality high yield stocks. When we look at chart 1 (attached), the enormous gap in yield between Australian 10-year bonds and bank stocks is very evident. However, when we add the combination of franking credits to the equation and potential rate cuts, the gap is very attractive for bank investing. Outside of wildcard events like the GFC and the US debt downgrade, the gap between the yield on bank stocks and 10-year bonds is usually much closer, implying bank stocks will rally to narrow the gap. Via @shickman


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