Three dividend stocks got the thumbs up from top Wall Street analysts this week. The stocks pay dividends. The analysts like them. This is what passes for financial journalism now.
Retail traders will read this headline and think they've discovered a secret. They haven't. Dividend stocks have existed since the Dutch East India Company started handing out cash in 1602. That's four hundred and twenty-four years of not being a secret. But sure, Gary from Akron, you cracked the code because you read a headline on your phone while sitting on the toilet.
The analysts are unnamed. The stocks are unnamed. The dividend yields are unnamed. The only concrete information in this entire headline is that the number three exists and Wall Street analysts have opinions. I could generate this exact headline with a random number generator and a Magic 8-Ball.
Here's what actually happened: Three analysts needed to justify their salaries so they picked three stocks that pay dividends and called it research. Some editor needed content so they published it. Now you're reading about it. The circle of financial media life continues unbroken.
The best part is the phrase "steady income." Dividends get cut all the time. Companies go bankrupt. Entire sectors collapse. But if you say "steady income" in a headline, retail traders forget that 2008 happened. They forget that dividends are just company profits being returned to shareholders instead of reinvested. They forget everything except the dopamine hit of imagining passive income while they're still three months behind on their car payment.
Top analysts recommend these stocks the same way top chefs recommend using salt. It's not wrong. It's just not information. But retail traders will buy them anyway because someone with "top" in their title said so, then they'll check the price every four minutes and panic-sell the first time the stock drops two percent.
Photo by Niki Clark on Unsplash
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