Yield divergence hits lowest levels in 15 years
Yield divergence hits lowest levels in 15 years. This chart from Goldman Sachs shows the convergence of dividend yields across sectors on the ASX. In their reporting season summary BTIM make the following observation: This has important implications for portfolio construction. For the last few years investors would have done very well by simply favouring defensive yield stocks. In today's environment the valuations of those stocks appear less sustainable given limited earnings growth, while potentially higher dividend growth across some more cyclical parts of the market creates scope for further re-rating. BTIM says traditional yield stocks and high PE names look vulnerable and they are turning their focus to stocks that fit their criteria for 'emerging yield'. A few of the companies they see in this space include Macquarie, Asciano and Resmed. There is much more detail in this report: (VIEW LINK)
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