Bill Gross, "The Bond King" who manages 1 trillion dollars in fixed-income investments at Pimco, has been urging investors to move out of low-yielding bonds and savings accounts into utility and telecom stocks with high dividends:
"The last 12 to 18 months have proved there's an appropriate price for liquidity and these days that comes in the form of a near-zero percent yield. For the typical small investor, that represents an insurance policy or a way station for required expenditures in the near-term future."
Instead of draining their money-market accounts, Gross would rather see investors replacing some of their growth stocks with high-dividend-paying stocks.
"Don't forget that even today's 2% to 4% bond yields aren't as paltry as they look, because inflation remains close to zero. The 6% interest income you remember earning a decade ago came at a time when inflation ran about 3%. You might protest that inflation, as officially measured, is understated today—but it is probably no more inaccurate now than it used to be. In real terms, you are only slightly worse off now than you were then." Bill Gross in WSJ
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