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Investing Specialists

Dividend-Paying Stocks Continue to Garner Attention

While our list of Ultimate Stock-Pickers is not imbued with equity-income investors, the allure of dividend-paying stocks has not gone unnoticed by our top managers, especially with bond yields at historically low levels and interest rates bound to go up over the next several years.

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By Gaston F. Ceron | Stock Analyst

While global equity markets have regained some of their footing during the third quarter, we don't believe that this signals an end to market volatility. With Europe continuing to deal with what has become an expanding debt crisis, most developed economies around the globe struggling to maintain any kind of positive momentum, and growth in emerging and developing markets like China and Brazil stumbling as a result, we don't see much that will change what has been a macro-driven market for investors. We continue to believe that this ongoing volatility has affected investor behavior, causing them to rapidly alter their risk tolerances and asset class preferences in response to short-term news and investment performance. Not surprisingly, in an environment exemplified by market volatility, fixed income, which some investors consider to be "safer" investments than equities, continues to be the asset class of choice for investors putting capital to work, with year-to-date flows for taxable bond funds, according to data provided by Morningstar Direct, reaching $202 billion at the end of August, surpassing the $177 billion that flowed into the category last year, and putting 2012 on pace to hit the level of inflows seen for taxable bond funds overall in 2010 (when $246 billion flowed into taxable bond funds), and quite possibly 2009 (when we saw more than $329 billion flow into the category).

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The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.