Time To Dump High-Dividend Stocks?

Looking for another reason for the run-up in dividend stocks? Because investors were scared out of their minds after the financial crisis and decided the safest thing to invest in was to buy quality names that they recognized. After all, the global economy may have been in ruins but people were still going to wake up and brush their teeth every morning. Investors have turned to blue-chip companies, like Johnson and Johnson JNJ +0.34% or Kimberly Clark KMB -1.19% , that they know and that pay dividends significantly higher than they can get on a bond or bank deposit. It's gotten to the point that high-paying dividend stocks have turned into an alternative to bonds.

High dividend payers lag in rising rate time periods because their yields are less attractive. The last thing you want is to be buying high. Remember the old investing axiom: Buy low and sell high. Make sure you are ready for the new higher rate reality. Review your portfolio to see if you may be overexposed to dividend stocks and if a transition to growth makes sense.

Source: Market Watch

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