How will dividend stocks fare as rates go up?

Interest rates have started creeping up over the last few weeks … everyone from former FDIC head Sheila Bair to folks at the International Monetary Fund are now warning that we could see serious financial problems dead ahead … and our own team now believes the Federal Reserve’s 25-year monetary experiment comes is about to come to shocking close. So given all that, I want to start talking about how this situation might affect some of the investments and strategies I favor. Let me start by saying that higher interest rates should be great news for conservative investors and savers. They will finally allow us to get fair returns on our money without requiring larger-than-normal risks. At the same time, there is no doubt that lots of portfolios are going to get crushed along the way.

I believe bond investors have the most to fear, and I have been saying so for quite some time now. But I won’t pretend that dividend stocks are entirely immune. This is precisely why I have been preparing my Income Superstars subscribers for months now — especially when it comes to utility stocks. Utilities are the stock market sector that gets hit the hardest by rising interest rates. One last thing to remember is that quality dividend companies — including utilities — have the ability to continue increasing their dividend payments as time goes on. So even if they get hit as rates jump, they have the potential to hand out ever-increasing streams of income over the long-term.

Source: Uncommon Wisdom Daily

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