Dividend stocks are a better investment than income properties: BMO economist

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Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

, BMO senior economist Robert Kavcic compares the yield from fixed income and dividend stocks to an income property,

“The economics of real estate investment get tough on a relative basis given that investors can secure a better yield in dividend stocks, or sit tight in risk-free cash/government bonds. The comparison to dividend stocks is an especially interesting one because both offer long-term capital appreciation potential, and both will see their payouts grow over time at least in-line with inflation.

“Rising Rates Still a Near-Term Risk. In early August we noted the market’s increased sensitivity to rates and expected a tougher tape until 10yr went sub-4.05 per cent; since then, the SPX is down 2.9 per cent and the 10yr rose to 4.3 per cent. We estimate that all-in 10yr rates have another 15 basis points of upside before firming… Bear in a China Shop.

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