Comments 3

  1. Thomas @ i need money ASAP!

    With the ridiculously low yields on bonds and CDs those dividend paying stocks the next best thing for monthly income from a financial asset. They’ve probably benefited a lot from the reduction interest rates the same way that bonds have. That being said, rates can’t go much lower, and if they do go up then bonds and possibly dividend stocks could bear a larger potion of the downside.

    1. Post

      If interest rates go up substantially, pretty much the entire stock market will take a hit, and bonds will be in trouble for a long time. It doesn’t leave a whole lot of great options. That’s why I try to stick with decent value, high quality companies, that are just going to keep growing and keep raising their payouts. That’s the best way I know in the long-term to protect my purchasing power.

      However, I think the likelihood of any meaningful interest raises to be highly unlikely anytime soon. Who knows when Treasuries will get back to even 6%.

    2. Post

      Dividend stocks could bear some pain if people are only holding them for yield, however I’m trying to buy high quality assets that also return capital. I think something like REIT’s that are purchased purely for income would be much more likely to get crushed.

      In general I’m happy if my dividend payers go down for long periods of time. So long as I’m confident in the business and it continues to put off cash and grow, I usually keep everything set to a DRIP, so every dividend in a low price environment just buys me more shares.

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