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If you spend much time managing your own money or researching companies, odds are you have been exposed to high-yielding opportunities. From stocks to bonds to real estate, there are plenty of investments out there that present themselves as quality investments while simultaneously generating large income streams.
7%+ yields seem hard to beat, but there is usually a reason why the yield is so high. In a way, the market is essentially showing the investor a blinking warning light, one that indicates that there is risk built into the price of the company. This is not to say that these opportunities don't work, just that dividend growth investors need to be wary of what they entail.
In the year's final episode, Greg answers a listener's question about prioritizing dividend growth or yield when nearing retirement age. That opens the door to examining the pitfalls of investing in high-yielding companies, where he provides a framework for analyzing the risk embedded within such investments. Later he compares Williams-Sonoma and Restoration Hardware in response to Berkshire Hathaway's recent addition of the company to its portfolio. Finally, Greg wraps up the episode with some food for thought.
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