Are double digit dividend yields too good to be true?
Contrary to many investment advisors who have been promoting dividend plays as a conservative bear market strategy, the December 18th, 2008 issue of the ETF Profit Strategy Newsletter warned investors that ‘risk management is more important than dividend yield. If history is a guide, dividend yields will not be able to protect investor as the stock market slides further to manufacture higher yields’ (this update was available to subscribers only). This recommendation harmonized with our big picture outlook given to subscribers on January 15th: ‘The best target for a temporary low is 6,700 for the Dow and 700 for the S&P 500. Extreme pessimistic sentiment may drive the indexes even towards Dow 6,000 and S&P 600. Once the new lows are reached, the markets should stage the biggest rally seen since October 2007. This rally should last several months and lift the major indexes by 30% or more.’ As it turns out, some of the biggest names in U.S. business have cut or eliminated dividends, choo
