In the current investing environment, dividend stocks are in favor. Only late last year did the Federal Reserve finally raise interest rates—for the first time in nearly a decade. In the aftermath of the financial crisis and recession of 2008, the U.S. central bank lowered interest rates to zero, in an attempt to reignite domestic economic growth.
This worked to lift the U.S. out of recession, but a negative consequence of this policy is that any investor who desires income from their investments, such as retirees, are being paid little to no interest on traditional income producing products like bank certificates of deposit. Even the 10-year Treasury Bond yields just 1.75% today.
This means investors are thirsty for yield. To quench that thirst, investors have plowed into dividend stocks like water utilities. The utility sector, and in particular water utilities like American Water Works (AWK ), are a haven for income investors. This stock has performed well over the past year and rewards investors with a growing share price and 2% dividend. American Water Works is a top dividend stock for its secure business model, stable earnings, and reliable shareholder distribution.