July 14, 2012
As interest rates hover near record lows, income investors faced with a lack of options have increasingly turned to dividend-paying stocks for yield. The search for yield in equities has become so pervasive that even superlatives like "dividend bubble" are being thrown around, warning investors that dividend stocks are insanely overvalued. In fact, earlier this year fellow Fool Morgan Housel explained why S&P 500 constituents Altria and Consolidated Edison were prime examples of overextended dividend stocks.
While it's true that there is no shortage of dangerous dividend payers out there, from a high level there is another factor -- earnings growth -- that's made dividend stocks look very pricey relative to non-dividend-paying peers. In the following video, Brenton goes through some interesting statistics on the topic.
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