Dividend Stocks for a Rising Rate Environment

While Federal Reserve Chairman Bernanke's comments have temporarily calmed the markets' fears of the Fed possibly ending its stimulative easing posture, interest rates have been rising in the U.S. and are likely to keep rising over the next six to 12 months. One of the many implications of this rise has been a headwind for dividend-oriented stocks, as bond yields are becoming more competitive with stock dividends. 

While bond yields, which were as low as 1.6% on 10-year U.S. Treasuries, had been well below the 3% to 4% dividends (or more) offered by a number of high quality, consistently performing U.S. stocks, the landscape has changed significantly and quickly. The recent dramatic increase to 2.7% on the 10-year U.S. Treasury, and the likelihood that interest rates might reach the 3% level or higher in the not too distant future, means that safe bonds should increasingly offer a reasonable income alternative to higher yielding stocks....650 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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