The problem: Investors, desperate for yield with interest rates so low, have driven up the price of dividend stocks to lofty levels. Research from Rob Arnott’s Research Affiliates suggests as investors move from low-yield bonds into dividend stocks, they are going from the frying pan into the fire. Top holdings of Vanguard Dividend Growth Fund include Microsoft Corp. MSFT -0.14 % , Nike Inc. NKE -0.87 % and Costco Wholesale Corp. Declines in a stock’s price can far outstrip the value of its dividend yields. By contrast, the standard deviation of returns of Vanguard Dividend Growth fund over the same period was 12.46%.

Source: Wall Street Journal September 06, 2016 02:06 UTC