What's Long Worked For Dividend Stocks No Longer Does As Worries Climb About Interest Rates

Dividend investing used to be so easy, not to mention lucrative. But it may be set to get a lot different. Stocks that pay the biggest dividends took a nosedive last month. Power and gas utilities -- once such steady and boring payers of dividends that they were called "widow-and-orphan stocks" -- posted their second-biggest drop since the financial crisis. That's even though every other sector of the market continued to cruise higher in February.

Get ready for yet more swings, say managers of many dividend-focused mutual funds. Last month may have been a sneak preview of the volatility in store as interest rates eventually climb, and managers of dividend-focused funds have changed their playbook in anticipation. To be sure, those same managers also still tout that dividend-paying companies tend to have more stable businesses and are profitable enough to promise regular checks to shareholders. Companies in the Standard & Poor's 500 index paid a record $45 billion in dividends last month, according to S&P Dow Jones Indices, and full-year payments look set for a fifth straight gain of at least 10 percent.

Source: Fox Business

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