How Dividend Chasers Are Missing The Forest For The Trees

How Dividend Chasers Are Missing The Forest For The Trees

Conventional wisdom in the market these days says interest rates are going higher. Some investors have tried to get ahead of that trend by pouring money into dividend stocks in recent years, but to Meb Faber a laser-like focus on dividends is akin to missing the forest for the trees.

Faber, chief investment officer at El Segundo, California’s Cambria Asset Management, says that while dividends are the most tangible and commonly discussed form of capital return, investors who focus exclusively on dividend yield are missing out.

“I love dividends, they’re a huge component of total return,” Faber says, but when an investor bets only on companies with fat dividends they are making a very active bet that ignores better opportunities for return.

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