Jack Hough, one of my favorite investment journalists at Barron’s, is urging his readers to consider selling high-dividend, low dividend growth stocks. That’s right, he suggests that I think about selling my portfolio, since dividend earners is my focus. And I like firms with a high payout ratio. 

That’s a simplistic interpretation of “It’s Okay to Panic about the Stock Market” story online this week. His thesis is pretty simple. Investors have been starved for yield for more than a decade. Interest rates are rising, and the returns on bonds and bank savings accounts are beginning to look more palatable. Even with the recent dip, equities seem pricey by historical standards.

But as Hough points out, over time, equities that pay dividends historically have outperformed bonds. Here’s the money quote:

“Stocks remain likely to outperform both bonds and cash over time, because that’s what they do. Stocks represent companies, and bonds and cash represent the cost of financing, and companies wouldn’t exist if not for their ability to out-earn the cost of financing over time. So investors who don’t have a history of panic-selling their stocks during market downturns should stay put.”

He notes that analysts at Goldman believe stocks can continue to rise as long as the 10-year Treasury yield does not exceed 4%, and Bank of America thinks even a 5% 10-year yield might not unravel the bull market.

As for me, the volatility in the market hasn’t spooked me too much. I added a small bit of CWEN and UBS to my portfolio in the last week, nibbling up a few shares on the dip during last week’s sell off.

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