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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8740  
Subject: Re: AT&T: Financial Shenanigans Date: 4/23/2013 3:31 PM
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To me this indicates low interest rates are causing fixed income investors to bid up prices of these stocks. I fear this will end badly. The stocks seem over valued.

There's almost certainly going to be a giant sucking sound; a downdraft, for the overall stock market if interest rates rise quickly and significantly. However, I'm not sure if the way above average dividend yields these companies have will help cushion their falls, rather than help push them deeper into the abyss. A lot of retail investors who buy these stocks do so for their dividends; not for their capital appreciation potential.

But I agree with you, it's low interest rates that has helped bid up the market in general and especially stocks with healthy dividend yields. But, if you bought a stock and at your purchase price the yield was 5% and you are using those dividend dollars to help pay your bills, you are not necessarily going to sell the stock if the price heads south, and, you're not going to necessarily sell the stock if the stock price rises significantly either.

kelbon
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