High yield debt and high dividend equities offer 'better returns' Go compare with our comparison table

High yield debt and high dividend equities offer 'better returns'

07 September 2010 / by Rachael Stiles

J.P. Morgan Asset Management has said that investors looking for better returns should turn to high yield debt and high dividend equities.

While government bond yields are at record lows and there is a "cloudy outlook" on the horizon for equities, Dan Morris, market strategist at J.P. Morgan suggests that high yield bonds, high dividend equities, and convertible bonds "could be the answer in a low yield environment."

In his latest outlook, Mr Morris has highlighted how government bond yields have fallen to levels not seen since the depths of the economic crisis at the end of 2008, and in some instances have fallen even further, and which investments might offer more attractive returns.

So, with low values in the US, UK, German and Japan meaning that those investors purchasing bonds now are more likely to see negative returns that positive ones in the near future, investors are wondering where to look for higher returns.

Dan Morris explains that his combination of high yield bonds, high dividend equities, and convertible bonds could provide a solution in the form of "an opportunity to participate in any equity rally that occurs while protecting against the risk of another market correction."

"High yield debt, in particular, is offering attractive spreads in comparison to government bonds. So with corporate balance sheets looking robust, and cash generation strong, companies should have little difficulty in meeting debt repayments."

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