Investors Flock to Dividend Stocks in Quest for Yield

Income investors are turning to dividend stocks, as they search for yield in a low-interest-rate environment. The S&P 500 Dividend Aristocrats index, which includes S&P 500 companies that have increased dividends for the last 25 straight years, has generated a return of 5.9 percent so far this year through Monday. "The search for yield hasn't abated," Mark Freeman, chief investment officer at Westwood Holdings Group, tells The Wall Street Journal. "When you see things like utilities and REITs [real estate investment trusts] leading the market, I think that speaks to the impact of it."

While interest rates will eventually rise, which could hurt dividend stocks, that's no reason to abandon them, says Josh Peters, director of equity-income strategy for Morningstar research firm. "Mentally you have to be willing to accept more interest-rate risk in a high-income strategy than you would have with perhaps a more speculative strategy," he says on Morningstar.com.

Source: Money News

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