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Are Rising Rates a Problem for Dividend Stocks?

Aaron Levitt Jan 14, 2021

These are certainly interesting times to be an investor. We all know that volatility has risen thanks to the COVID-19 pandemic and its effects on the economy. At the same time, the recent bout of political unrest and uncertainty is adding another wrench in the machine. By all means, we should be running for the safety of cash and bonds. But that hasn’t been happening – especially in recent weeks.

Yields on safe government bonds have actually been rising.

Thanks to the incoming Biden administration and its plans for trillion dollar stimulus measures, investors have started to analyze what that actually means. Both in terms of the snap-back to the economy and what that will do to the U.S. debt levels and future borrowing costs.

For dividend investors, higher bond yields and the potential for rising rates create another equation to solve. Are higher yields going to affect the current playbook? And if so, what does the future hold for dividend stocks?

Don’t forget to explore our Fixed Income Channel to know more the trends in this space.

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