ROSS Barker, the managing director of several listed investment companies, is not betting on the yield trade to drive markets as hard in the next 12 months, saying some big dividend-paying stocks got "very toppy" before the recent sell-off.
Speaking as Mirrabooka Investments unveiled a 5c special dividend yesterday, the LIC's managing director said while investors were going to continue to hunt for yield, the rally in several stocks would limit the broader market's return.
The last financial year was the best since the global financial crisis, with the S&P/ASX 200 index rising 17.3 per cent as the banks, Telstra, REITs and utilities powered gains. But experts are divided on the longevity of the yield trade as the US Federal Reserve signals it will ultimately pull back stimulus, which has pushed global interest rates higher.
"A lot of the stock prices have had pretty hefty rises and I don't think many of the companies are saying they are going to increase their profits a lot, so we mightn't find there's a lot more legs to that yield rally," he said.
