As the stock market continues its relentless advance, attractive valuations are getting harder and harder to find. This is especially true for the highest quality blue-chip dividend growth stocks. Perhaps more importantly, in addition to the market’s relentless advance, there has also been a clear flight to quality - especially with dividend growth stocks. Therefore, the vast majority of the best-of-breed blue-chip dividend paying stocks are currently trading at elevated levels. In other words, finding high quality and value is very rare today in the dividend growth segment.
This presents a conundrum for the prudent dividend growth investor with money available for investment. Prudence suggests that the quality of the companies chosen for their portfolios is extremely important. It only makes sense to try to invest in the highest quality companies you can find. However, the prudent dividend growth investor also needs to ask and answer another important question. At what point does excessive valuation turn quality into high risk investments? After all, the idea behind investing in quality is to lower risk.
Continue to read at TalkMarkets to find out what is Chuck Carnevale’s opinion