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Market Wrap-up for Jan. 29 - The Chase for Yield Continues

There were few changes that came out of the FOMC meeting on Wednesday afternoon. As interest rates continue to remain low, the chase for yield continues.

FOMC Meeting

There was little change from the FOMC meeting in December, which was no surprise for Wall Street. The Fed noted once again that it would remain “patient” on raising interest rates. Analysts expect the Fed to wait until at least June before raising rates.

The Fed reported positively on the state of the U.S. economy, stating that labor conditions and economic growth have improved. While comments on the U.S. growth remained positive, there was no mention of the global economy. However, the Fed did express concerns over near-term inflation, which has fallen below its target rate due to low energy prices and the strengthening dollar.

The Chase for Yield Continues

With interest rates remaining at ultra-lows, growing your money has gotten more difficult. However, as dividend investors, there are many opportunities for yields in dividend friendly industries including utilities, tobacco, telecommunications and REITs. These industries can help you beat inflation, while investing in safe, solid companies.

While investors pile into these high yield industries, it is important to remain cautious and to avoid unsustainable dividends and dividend traps. Don’t forget that if a yield seems “too good to be true” – it probably is.

The Bottom Line

Since it may be some time before interest rates are raised, income investors should evaluate their portfolios to make the most out of yield opportunities. Here are some resources to help you find the best yield-friendly investments for your portfolio.

Monthly Dividend Stocks

Did you know that many companies pay their dividends monthly, rather than quarterly? Consult our Monthly Dividend Stocks page for a full list of these stocks, which can prove very useful for income-minded investors.

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