This post was contributed by a community member. The views expressed here are the author's own.

Health & Fitness

Dividend Trouble?

In the aftermath of the financial crisis, as both individuals and organizations struggled to find their footing and re-establish themselves, dividends became a safe haven for many investors. As the Federal Reserve pursued a policy of Quantitative Easing, which has kept interest rates artificially low since 2008, investors who normally had invested in bonds had to find yields and returns elsewhere. In addition, the consistency, reliability, and cash flows that result from dividends gave many investors a level of comfort and peace of mind that was hard to come by. Over the last several years, dividends and buybacks have come to dominate much of the stock market conversation — institutions realize that investors are eager for dividends, and investors have flocked to firms that pay them.

Real estate investment trusts (REITs), financials, utilities, and new entrants to the dividend game (such as Apple) have become favorites of many investors. Combined with the rising use of buybacks, which number in the trillions since the financial crisis, many have begun to speculate that this aspect of the market is overheated. Larry Fink, a prominent Wall Street CEO, actually has come out and said that he believes that these two metrics have been overdone.

The primary question that many have been asking is this — are firms emphasizing buybacks and dividends over capital expenditure and investing in long-term growth opportunities?

Find out what's happening in Hobokenwith free, real-time updates from Patch.

Food for thought.

Happy Reading!

Find out what's happening in Hobokenwith free, real-time updates from Patch.

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?