Our Chief Investment Strategist just did an interview in which he talked about one of his key themes in asset allocation--what he terms "dividend sanctity."
This is the idea that equity dividends are crucial, especially in periods like this one, where earnings growth is sluggish.
Free cash flow and balance sheet strength are of paramount importance, because they indicate a companies ability to weather a downturn without cutting their dividend.
Guess what? Weep for the dividend.
Barack Obama has repeatedly said that he will raise the tax on dividends and the capital gains rate. Like him or hate him, raising cap gain rates and div. rates will seriously hurt the market.
It will fundamentally alter asset allocation strategies as yield becomes less important. Investors need to be prepared.
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