Investors Should Be Skeptical of High Dividends

by Andrey Dashkov
Casey Research

It’s a tough time to be an income investor.

The COVID-19 crisis led the Federal Reserve to push interest rates to their lowest levels in a decade… which means one of the top sources for passive investing income, U.S. Treasurys, aren’t paying much anymore.

Right now, it’s impossible to get any sizable income out of bonds. Even 10-year Treasurys pay less than 1%. That’s four times less than they paid back in 2010.

So it’s no surprise that plenty of investors are looking to stocks that can provide passive income – in the form of dividends.

After all, if you look for the ones with the highest dividend yields (the amount paid in dividends over a year divided by the current share price), you’ll find plenty of stocks that pay more than bonds right now.

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