Are Dividend Stocks Losing Their Luster?

Dividend-paying stocks may be starting to lose their luster. With Treasury yields rising and investors shifting gears toward growth-sensitive sectors, some market participants are cautioning that the dividend trade isn’t looking as attractive as it did even just a few weeks ago. The yield on the benchmark 10-year Treasury note jumped to 1.817% on Friday, up from a record low of 1.39% in late July.

“As interest rates rise, dividend-paying stocks become less attractive to what are considered safer alternatives,” analysts at Bespoke Investment Group wrote to clients on Friday. So yes, dividends may lose some short-term appeal. But for those investors who aren’t timing the market on a short-term basis, dividends still matter. “Over time dividends count – not over days, weeks, or months, but over years,” Silverblatt says. “Dividends remain for long-term investors, with dividends just getting in the way for short-term traders and speculators.”

Source: Wall Street Journal

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