Dividend Stocks Are Still The Place To Be

At the beginning of the year, investors were driving up the prices of defensive stocks (healthcare, utilities, and consumer staples) over more growth-oriented stocks (financials, cyclical, and industrials). In a traditional bull market, growth stocks lead the charge. At the time, investors were willing to pay almost as much per dollar of earnings (expressed by the P/E ratio) for safety and income as they were for growth. In fact, utilities were trading at a higher P/E than industrials and financials. The market was being driven by fear, and growth stocks were not being rewarded.

When the dust settles, we expect that interest rates will continue to stay very low. The chances of a recession in the United States are still very unlikely. Unacceptably low rates will force investors to seek alternative ways to produce income and return. This continues to make stocks attractive, especially those who are committed to paying and consistently growing dividends year after year.

Source: Seeking Alpha

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