It’s no secret that dividend investing is a pretty hot trend at the moment. Investing for a share of corporate profits has had a huge resurgence over the past few years as a myriad of factors have helped push more investors toward the style. Some analysts and pundits have actually postulated that we’re seeing a return to the 1950s and 1960s, when most investors bought stocks for their dividends, rather than capital gain potential.
The problem is maybe we’ve gone a tad bit too far with our love affair with dividends. And mutual fund powerhouse, Vanguard fired the first warning shot in that regard.
It’s decided to close its largest dividend-focused mutual fund to new investors.
This is not something that many dividend investors should take lightly. Ultimately, the move could signal that dividend stocks — as a category — could be finally overstretched a tad bit.