It’s no secret that dividend stocks have been hot over the last few years. In order to jump-start the economy, the Federal Reserve basically cut benchmark interest rates down to zero. That had a dramatic effect on more traditional income investment products such as bonds, money market funds and certificates of deposits (CDs). Payouts and yields on these investments shrank to basically nothing in the years after the recession.
Perhaps what was worse was that the Fed had kept rates in the basement for years.
For investors seriously trying to live off of their portfolios, these low rates were proving hard to deal with. You no longer could stick money in a CD and collect 4% or more a year in interest. To get that yield, investors choose dividend stocks.
But with the Fed finally starting to raise interest rates, some analysts have postulated that dividend stocks could be in trouble. That might be true for some sectors or stocks, but there are ways to still bet big on dividends and get through the current tightening cycle.