What to Do With Your Dividend Stocks

In terms of the major trend, I do think we're either just past, at, or close to a bottom in rates. Sure, maybe benchmark 10-year Treasuries will hang in there better than other rates, but it appears the peak of perception (which is what really drives prices) has passed. Going forward, it's hard for me to predict a major bear market in all things income, mainly because the overall trend isn't yet decisively down, and let's face it—with gold and most commodities looking sick, it's unlikely inflation is really going to pick up in a meaningful way. More likely, I think it will be an "income pickers market."

Even now, I see plenty of higher-yielding stocks that are acting just fine; yes, many of the overplayed defensive names (Kellogg, Johnson & Johnson, etc.) look ragged after big runs, but other dividend payers are holding up well. And, of course, even within certain income sectors like REITs, some look a lot better than others. The same goes in the MLP space and elsewhere. The bottom line is that the throw-a-dart-and-make-money phase of the income move is probably over. Yet if you're dreaming that the bank is going to offer you a 6% CD, keep dreaming. It's going to take some expertise to wade through the volatility and know where and when to buy and sell going forward.

Source: Cabot Investing Newsletters

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