If Dividend Growth Is a Substitute for Yield, What's the Risk?

The video discusses the role of equities as a substitute for yield, especially in the context of negative yields in the euro market. It explores the potential impact of ongoing market tensions and uncertainties, which could lead to a recession and affect dividend payouts. Despite this, current earnings are not negative enough to warrant deep dividend cuts, making equities attractive for investors facing negative interest rates. The discussion then shifts to bond market preferences, emphasizing caution in late-cycle investing, with a focus on high-grade debt and government bonds for portfolio construction.

In a late cycle economic environment, what type of corporate debt should investors prefer?

What is the significance of government bonds in portfolio construction during uncertain economic times?