The definition of what constitutes a ‘good’ dividend has shifted over the past year as the risk-free rate has risen.
To reinforce the point, from 2015 to 2021, the Stoxx Europe 600 index offered a 3.4% yield premium over the German 10-year bund. However, in January this year, the Stoxx 600 yield offered just a 1% premium. The rise in bond yields has changed the definition of what constitutes an attractive equity dividend, and higher levels are required to offset the higher risk-free rate. 'Year of the bond' will be bumpier than expected However, the companies offering yields in excess of 5% tend to do so for a reason, with concerns such as poor earnings and/or cash flow dividend cover, or other f...
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