The first was a fax I received from Michael J. Simpson who of course I have never heard of. His letter with no return address stated that he represented “very eminent persons in the Asian and South African region.” They have $70 million that they want to invest anonymously. They identified me as “someone of high business experience with very good reputation.” I would be the beneficiary of the funds and would keep a certain percentage of the funds.

Well I have decided after much thought that I will not respond to Mr. Simpson but if there are among my readers those who would like to make a fast buck, let me know and I’ll put you together with Michael. His phone number has 11 digits so I’m not exactly sure what the area code for Asia or South Africa is but Mr. Simpson may also be writing from Devil’s Island for all I know.

The below email came from a person who had contacted me some time ago thinking that my blog for some reason related to Canadian economic issues! Her email was informative and I have put a few paragraphs below so that if any of my readers are interested they may find this information useful. If not it will beat Ambien for those who are sleep challenged.

“According to Credit Suisse, inflows into dividend ETF products in the U.S. increased from $2.5 billion in 2009 to nearly $17 billion in 2011 and year-to-date are nearly $11.4 billion of net new assets. The number of dividend-centric ETFs has doubled, from 24 in 2007 to 50 at present, with 14 launched since 2011.

This dramatic increase in popularity of high dividend equity products has raised questions of a dividend bubble, and many investors wonder if the trend can continue or whether it is now over-inflated and due for a correction.

Credit Suisse doesn’t believe a bubble has formed and they point to economic price earnings multiples as a gauge of overall valuations. Their research shows stocks with a dividend yield higher than the S&P 500 are trading at an Economic P/E multiple of 16.9 times earnings, representing a 0.4x multiple discount to the market. Although these high dividend yield companies have historically traded at a higher discount to market, Credit Suisse sees evidence of the valuation discount disappearing and considers the post credit crisis era a more plausible benchmark for the valuation of high dividend yield stocks going forward.”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s