One Big Investor’s Case For Dividend Stocks

Investors in general, and retirees in particular, are anxious about what an imminent rise in interest rates could do to their portfolios. That anxiety is particularly acute when it comes to bond portfolios: Rising rates would give income-seeking investors the chance to earn more interest from their investments, but they’d also drive down the value and buying power of whatever bonds those investors currently own. This week, BlackRock, the Wall Street behemoth with $3.79 trillion in assets under management, makes the argument that, regardless of what interest rates are up to, investors might generally be better off in dividend stocks instead of bonds.

BlackRock’s argument boils down to this: “Over time, company dividend yields tend to grow, whereas a bond’s fixed coupon can’t.” What’s more, the firm adds, among the stocks in the Standard & Poor’s 500-stock index, “Dividend increases historically have outpaced the rate of inflation by 1%-1.5%.”

Source: Market Watch

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