The difference between yield and income
The difference between yield and income. Philip Baker from The Australian Financial Review writes: One misleading comment that gets thrown around is that investors looking for dividends should chase the highest-yielding stocks. Yield and income are two different things, yet over the past few years in particular, as investors focused on dividends, the two have often been linked. Yield is an abstract number derived from two dollar values. It is a snapshot and doesn't say much about the growth in the underlying income. Smart investors would be happy to choose stocks that yield 1 per cent as they are often the stocks that, over time, pay more income than those yielding 8 per cent, and provide the best share price appreciation. In the full article (VIEW LINK) (paywall) Baker points to three stocks that Goldman Sachs say provides investors with exposure to these four themes for the sharemarket - structural growth, income and growth, deep value and defensive high yield - that have lower risk and sustainable income streams. These companies are ANZ, Mirvac and Spark Infrastructure.