Risky Bonds? Where do you put your money?

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With bond yields so low and the potential downgrading of bonds, is it a good idea to substitute dividend-paying stocks for bonds? Some would say yes, since dividend-paying stocks yield more than some bonds, and have more upside potential. But there’s no getting around the fact that stocks, including dividend-paying stocks, are generally more volatile than bonds. Substituting dividend-paying stocks for bonds will lead to a higher risk portfolio.

Question:

1. In this video, the expert recommended the Asian Telcos?  What types of stocks is he referring to?

2.  How do you calculate the dividend yield ratio for a stock?  What do these experts say that this should be compared against when making this decision to switch to dividend paying stocks?

3. Why did the S & P downgrade the outlook for fiscal challenges facing the U.S. on April 18?  What effect will this have on bonds?

4.  What are the risks of putting your money in dividend-paying stocks as compared to bonds?

Source:

CNBC Video. (2011). Investing in High Dividend Yield Stocks (Retrievable online at http://video.cnbc.com/gallery/?video=1888416221)