The Only Chart You Need to See to Invest Smarter

Investment legend Warren Buffett has said: "​​Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing." This one chart, when applied correctly, can help you avoid those urges, collect large dividend checks, and invest with a contrarian bent. Here's how to use it.

There's no point keeping you in suspense: The chart we're discussing here is best described as relative dividend yield. When investors think about valuation, they often default to the price-to-earnings ratio. Only there's a major problem with earnings: They can be volatile and, unfortunately, prone to manipulation. Dividends, on the other hand, are fairly consistent over time for most companies, making them a more useful way to examine valuation.

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Source Fool.com