Pimco’s Bill Gross Makes the Case for Dividends, Gold
As managing director at bond giant Pimco, Bill Gross might be considered by some to be the "bond king, " but he actually thinks dividend-paying stocks could be the better buy for long-term investors.
"I think ultimately, over time, that stocks – that high quality stocks, which return 2 to 3 percent, in terms of a dividend yield – are certainly a more attractive alternative relative to a 10-Year Treasury at 1.7 percent, " Gross told CNBC's "Futures Now ."
To Gross, efforts by the U.S. Federal Reserve to stimulate the economy by way of quantitative easing , or QE3, continues to affect both the bond and stock markets. The Fed's one power is to create money out of thin air and it's currently using that power. By buying $40 billion of mortgage-backed securities per month until unemployment improves, Gross said the Fed is basically "check writing, " which "props up" bond prices and lowers the yield on Treasurys. It also props up the stock market, he said, creating a "bubble" in both asset classes.
As founder and co-chief investment officer of Pimco, Gross currently oversees the management of more than $1.8 trillion. His firm recently added to its position of gold, which Gross sees as a hedge against the risk of inflation caused by central banks "printing money" in both the United States and Europe. While Gross wouldn't comment on specific levels, he does think the price of gold could continue to push higher in the near-term.
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