Swings and roundabouts Source |
By contrast, yield from dividends is usually seen as having a risk premium because you can quite easily lose some - or all - of your money. And pension funds, in particular, have to look at risk very seriously.
What is perhaps surprising is that this dividend risk premium is now positive and is at a generational high - with dividends now paying a premium over gilt yields last seen in the early 1950s. And bear in mind that Mr Market's memory usually only goes back a year or two!