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Summary
- Equities with high yields can mean high risk. When markets fall, especially in a high-interest rate environment, the risk on high-yielding stocks may be even greater.
- This article highlights three stocks with high yields that have poor overall metrics, posing many quant warning signals, intensified amid the banking crisis and interest rate climb.
- Notably, REITs and the real estate sector, despite portfolio diversification and typical inflation-beating income streams, should be viewed with caution when their yields are abnormally high.
- Despite offering tremendous yields and trading at discounts, investors should be on high alert when stocks display very large yields, as high yields are often a tell-tale of risk.
- SA’s quant ratings, dividend grades, and tools help to quickly display what stocks are at risk.
Investing in Stocks for Income: Treasuries or High Yield?
Over the last few years, we’ve witnessed a pandemic, economic corrections, tech and banking crashes, crypto scandals, and a real estate market that’s soared and flattened. When considering ways to hedge against inflation, some of the most apparent methods involve diversification. Finding investments that pay income to naturally offset a drop in portfolio gains and to offset drops in currency that result in decreased purchasing power leads many to think of high yield.
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