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The effect of dividend yield on stocks is a function of how stocks behave in
a declining rate environment. Most traders/investors are fixated on the "new
paradigm" where equities rise as yields decline, however there have been
long periods in history where equities and yields decline concurrently. When
there is little expectation of equity appreciation, equities, like bonds,
are valued based on yield.
Earl
-----Original Message-----
From: Alberto Torchio <atorchio@xxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Sunday, September 27, 1998 2:12 AM
Subject: Utlities Fundamentals
>Remains the yield. And here's the riddle. Why choosing high yield stocks,
since it would
>mean selecting those with lower potential move? I agree it would be a low
volatility
>portfolio, an extremely defensive choice. But in a falling interest rate
environment
>wouldn't it be better to select the lowest yielding, focusing on higher
appreciation
>expectation?
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