Retail Investors were clamoring for beaten down dividend plays in the month of August, at least according to TD Ameritrade's Investor Movement Index (IMX). In fact August saw the largest increase in exposure month-over-month in the index, which tracks what investments are most popular.
The IMX jumped 12% in August to 5.26, up from 4.69 in July, its highest level in over a year. The rise in retail investors' market exposure was helped by the low volatility we saw in August, a sharp contrast to the wild flash crash the market experienced in August 2015 - the S&P 500 Volatility Index (VIX) hit levels that we haven't seen since 2014.
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TD Ameritrade Holding Corp (NYSE:AMTD) also cited extremely low interest rates on income investments like, Treasury bonds, as a reason beaten-down dividend stocks became more attractive to retail investors.
Take Ford Motor Company (NYSE:F) for example. The stock is down 10% YTD, but with a 4.74% dividend yield, compared to the 1.6% return the 10-Treasury yield, it is looking like an appealing dividend play from a stable company.
Bristol-Myers Squibb Co (NYSE:BMY), Wells Fargo & Co. (NYSE:WFC), and Pfizer Inc (NYSE:PFE) were also enticing to retail traders, said Nicole Sherrod, TD Ameritrade's managing director of trading.
Higher volatility relative to the overall market in widely held names like Apple Inc (NASDAQ:AAPl) and Facebook Inc (NASDAQ:FB) had a compounding effect on the index reaching an all time high, which tracks hundreds of thousands of traders across all markets, she added.
The IMX results are also summarized in the video below.
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