Repeat after me. Stocks are not bonds.
However, there are a lot of bond-like stocks and sectors. Industries like utilities, consumer staples and REITs have historically acted very stable in the face of uncertainty. Thanks to their recession-resistant demand, cash flows and larger dividend yields, these sectors have long been the place to go to find ballast in a portfolio.
Or at least they were.
But with the Federal Reserve starting to ratchet up interest rates, many traditional equity defensive sectors have fallen flat. For investors, it could be time to rethink what they use for smoothing out the market’s wild ride. A dividend defense ain’t what it used to be.