orl punished, page-16

a13, the issue is that, along with the banks, the reason for the high yield is becuase there is an expectation that it won't last. This now being reflected in an adjusting share price.

Eventually one of two things will happen.

1. the market realises that it is under priced and bids the share price back up; or

2. Maintainable earnings drop and eventually either dividends have to fall, or the company has to eat into retained capital to continue to pay the current dividend yield.

An obvious example is the banks. They have a high dividend yield because there is an expectation that with, Basel III (capital requirements); falling credit; toppy property market (bad debt concerns and LVR degradation); international funding issues (carry trade/perceived risk of above); etc the earnings of banks are expected to fall. So over the longer term dividends are not maintainable.

The issue is that where you make it on the dividend income you could loose on the capital loss.