Dividend Stocks Could Bounce Off the Mat in 2014

While Federal Reserve tapering was the headline story for the markets in 2013, don’t expect a repeat in the year ahead. With the reduction in quantitative easing now officially set for January, investors largely know what to expect — meaning that tapering is set to move out of the headlines as we move through 2014. This removes a major headwind from stock market segments that have been under pressure through the second half of this year: utility stocks, REITs, MLPs and other dividend stocks.

Naturally, each of these groups has their own specific drivers of performance, as do the individual companies in each sector. Still, there’s little doubt that the concerns about rising bond yields have had a major impact on returns in the past year. After delivering strong relative performance in the 12 months prior to the surge in bond yields, each sector has lagged substantially since early May. While dividend stocks won’t be immune from an inevitable stock-market correction, they now appear to be increasingly safe from continued worries about Fed policy. For those who have been shying away from income-oriented investments due to uncertainty about tapering, Wednesday’s news signals better days ahead in 2014.

Source: InvestorPlace

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