Dividends4Life: Don't Let The Fed Scare Away From Blue-Chip Dividend Stocks

Often enough, I have come across commentary from the market pundits warning that the blue-chip stocks could get hit the hardest when interest rates start to rise. Considering that utilities and consumer staple stocks have led the market rally this year, it is reasonable to conclude that an increase in the interest rates could lower the valuations of blue-chip dividend-paying stocks.

The rules are a little bit different for blue-chip companies like Coca-Cola (KO), Johnson & Johnson (JNJ), and ExxonMobil (XOM) that are trading in a range from fully valued to slightly overvalued. As long as the company on your list is growing profits on a reliable basis over most three and five year rolling periods, you should be able to handle interest rate risk all right. Reliable 7-12% annual growth is a pretty good defense against the downward pressure of valuation multiples that can accompany rising interest rates.

Source: Seeking Alpaha

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