WB cut their dividend to $1.50 but with todays price it still yields 5.9%. I think I will invest some cash. That is still better that a CD, T-Bill or savings account.
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True enough (that it's a better yield than a CD) - but there's a *lot* more potential downside. I just read an estimate that said that if they cut the dividend again - which is entirely possible if they dilute to raise more capital and earnings don't come back as fast as hoped - not only would the stock price drop (probably a lot - another 10% or more) but so, too would your effective yield (ie. the dividend divided by your buy-in price) because of the new lowered dividend.
Dividend yields are *not* reasonably compared to CD, T-Bill or savings account yields. The latter three all have minimal (pretty much zero) risk of principal. They are ultra-low volatility vehicles. They have little upside - that's the price one pays for such stability.
But comparing WB to T-bills because of yields is completely an apples-to-oranges comparison and subbing one for the other makes no sense whatsoever - unless it's part of adjusting your planned asset allocation.
Even so - if you want to take some risk in the (presumably) cheap banking sector and get yourself some nice fat dividend yields in the process, be careful and diversify. Morningstar, for example, recently called the KBW Bank ETF "undervalued". Of course, they said that back in Oct, too (when it was the most "undervalued" ETF they tracked). Since then, it's gotten even *more* undervalued while both "fair value" and price have dropped a lot. It's yielding about 6.5% right now - about the same as WB's new yield - but perhaps a bit safer due to the (relatively) greater diversification. It's still a very risk very focussed sector play, though, and in no way comparable to the ultralow-risk fixed-income/cash alteratives you mentioned above. As you've seen - dividends can and do sometimes get cut - and sometimes get cut again.
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