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I’ve been in the market for over 25 years, and I still see investors make this one common mistake:
Paying for their dividend yield.
And no, I don’t mean paying a commission. I mean losing a huge chunk of their portfolio after those dividend stocks absolutely plummeted to the ground.
These are the yield investments I’m talking about…
The iShares 20-year Treasury Bond ETF (TLT) is a very popular income generator for investors. It pays about 1.6% dividend yield to its holders.
Another popular income fund, the Pimco Total Return Fund (PTTRX), pays an attractive 2.46% dividend yield to investors. It’s one of the “gold standards” for income funds.
But there’s a problem with both.
Since the beginning of 2021, TLT shares have lost more than 13%. PTTRX has lost 3.8% since the beginning of the year, and 2.6% in the last 12 months.
Believe it or not, this is the nature of the income beast. Values go lower as yields go higher.
This relationship sends a lot of investors out into the market to “forage” for yields. Why not? It’s the reasonable response.
But beware, because high yielding stocks are often no better.
If you’re looking for a safe dividend play that will earn you money – not lose you money – then I have 3 stocks that you’ll want to take a look at right away.