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Originally Posted by Shazam
Presumably people are purchasing said stocks in tax sheltered accounts.
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The sheltered accounts of individuals account for only a tiny portion of investable assets. Tiny. The trend to dividend stocks is wide sweeping, and includes professionally managed money.
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Just my opinion, but interest rates will never surpass nominal levels ever again. That doesn't mean buying just dividend stocks is a good idea.
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Never is a very long time. It wasn't that long ago that the popular view was that interest rates would never be able to sustain levels under 6%.
Interest rates plummeted world wide when governments realized that debt burdens were killing them. There was a global commitment to lowering debt, reducing deficits, and fighting inflation.
Recently, we are seeing a bit of a return to deficit spending, and somewhat less concern about inflation (complacency is probably a better word). If these trends continue, and inflation rates start to rise, along with debt levels, interest rates will respond. Not likely to happen quickly, especially in any significant level. But never say never.
Also, if dividend stocks are over-priced, we won't need to see increased interest rates in order to have dividend stocks under-perform going forward.