Equity yield appeal mere sirens in a sea of fiscal turbulence

A cursory glance at the historic dividend yield on the stock market reveals an interesting spread. T...

A cursory glance at the historic dividend yield on the stock market reveals an interesting spread. The dividend yield on the FTSE All Share at 4.94% in late April 2009 was higher than the 3.92% yield available from gilts. The last time this occurred, back in 2003, the equity market rallied strongly from undervalued levels. With rates on cash also at historical lows, equity yields must look appealing to income-seeking investors. Yet much like the fabled sirens who lured seamen to their deaths with their enchanting voices, the high dividend yield could prove dangerously deceptive. First, th...