The Lure Of Dividend Stocks Dims

There was a time not too long ago when the must-have investment was dividend-paying stocks. The investment thesis was straightforward and easy to understand: These stocks featured fatter dividend yields than the 10-year Treasury note, so buying these stocks made sense for investors in search of yield in a low-yield world.

But that storyline has changed ever since the Federal Reserve began hinting in late May that it's serious about cutting back on its aggressive bond purchase program, known as quantitative easing, or QE. Since then, the yield on the 10-year U.S. government note has shot up, including a peak of 2.66% in Monday trading. That's not only a 22-month high but also higher than the average yield of 2.5% that dividend-paying stocks in the Standard & Poor's 500 sport.

Source: USA Today

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