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July 24, 2019, 9:50 a.m. EDT

Dividend-paying stocks will leave Treasurys for dead, says mutual-fund company Federated

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By Barbara Kollmeyer, MarketWatch


Getty Images
Coca Cola — a classic dividend stock

Tech investors might want to grab onto the nearest railing.

Confirmation that the Feds have opened an antitrust probe into Amazon /zigman2/quotes/210331248/composite AMZN -0.28% , Google parent Alphabet /zigman2/quotes/202490156/composite GOOGL +0.23% , Apple /zigman2/quotes/202934861/composite AAPL +0.94%  and Facebook /zigman2/quotes/205064656/composite FB +0.03% is knocking those popular names, and setting Wall Street up for a bumpy ride Wednesday. Note Facebook results are due after the close, with Amazon reporting Thursday.

Read: The two big tech names that are most vulnerable to government action

It’s been a big year for growth stocks — newer companies that offer the chance for big gains, but with elevated risk — with many big tech names falling into that category. The Nasdaq, which houses a bunch of them, has soared 24% year to date, just ahead of a 20% return for the S&P 500.

Less popular have been value stocks, comprised of more traditional companies such as banks and conglomerates, which offer slower and steady returns, but require more patience. They also offer dividends and our call of the day from Federated Investors’s chief equity market strategist Philip Orlando, says it’s high time investors wake up to that benefit.

”You’ve got a benchmark U.S. Treasury yield at 2%. I can give you a high-quality U.S.-based dividend-oriented portfolio that will give you a 4% dividend yield right now, twice what you can get in Treasurys,” Orlando told MarketWatch in a recent interview.

Value stocks have indeed been underperforming, amid growth-stock fever. “The swing of that is that if [value stock] prices are down or lagging, that means their yields are going to be elevated.

And for those investors who are putting their money in Treasury bonds, and getting that 2% yield, if the economy starts to strengthen, those yields will go up and that will hit prices. But for equity prices, a stronger economy will be a positive for corporate earnings.

“So for investors who need yield, we would actually suggest that dividend-paying stocks are the new bonds, given how low Treasury bonds are right now,” he said. There’s more on the overly milked Treasury cow below in our chart of the day.

Read: These dividend stocks haven’t been scooped up by investors yet

And: Facebook’s CEO must personally certify company’s compliance with FTC under settlement

The market

/zigman2/quotes/210561242/realtime/sampled EURUSD 1.1032, +0.0001, +0.0091%

The Nasdaq /zigman2/quotes/210598365/realtime COMP -0.11% , Dow /zigman2/quotes/210407745/delayed YMU19 -0.04%   and S&P 500 /zigman2/quotes/209950421/delayed ESU19 -0.05% are lower as trading gets underway.

Gold is off, oil  is up and the euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0091%   is down against the dollar ahead of Thursday’s ECB meeting, which could lay the groundwork for a rate cut.

/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,817.46
-5.09 -0.28%
Volume: 2.54M
Sept. 18, 2019 4:00p
P/E Ratio
75.41
Dividend Yield
N/A
Market Cap
$901.54 billion
Rev. per Employee
$359,671
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/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,232.65
+2.77 +0.23%
Volume: 892,300
Sept. 18, 2019 4:00p
P/E Ratio
24.88
Dividend Yield
N/A
Market Cap
$795.58 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 222.77
+2.07 +0.94%
Volume: 25.64M
Sept. 18, 2019 4:00p
P/E Ratio
18.99
Dividend Yield
1.38%
Market Cap
$997.38 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 188.14
+0.06 +0.03%
Volume: 9.94M
Sept. 18, 2019 4:00p
P/E Ratio
31.88
Dividend Yield
N/A
Market Cap
$536.58 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,177.39
-8.62 -0.11%
Volume: 1.80M
Sept. 18, 2019 5:16p
loading...
/zigman2/quotes/210407745/delayed
US : U.S.: CBOT
$ 27,137.00
-11.00 -0.04%
Volume: 583.00
Sept. 18, 2019 6:38p
loading...
/zigman2/quotes/209950421/delayed
US : U.S.: CME
$ 3,004.75
-1.55 -0.05%
Volume: 2,224
Sept. 18, 2019 6:38p
loading...
/zigman2/quotes/210561242/realtime/sampled
US : Tullet Prebon
1.1032
+0.0001 +0.0091%
Volume: 0.0000
Sept. 18, 2019 7:48p
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