Rising Interest Rates - Headwind For Dividend Stocks

We are now standing on the threshold of a brand new era: that of the rising interest rate. After an unprecedented nine years of steady rates near zero, US markets are about to feel a pinch they have long forgotten the feeling of. Like a youngster cringing just before the doctor inserts a large needle in their arm, investors everywhere are bracing themselves for the first interest rate pinch in a very long time.

Rising rates will have a slightly less obvious impact on another segment of the marketplace, namely the large-cap and mega-cap high dividend payers in whom investors have long sought shelter during this long period of low yields elsewhere. What is odd about this space is that rising rates will have both a positive and negative impact on different elements of your investment: they will be a boost for the stocks' dividend yields, and by necessity, they will also be a headwind for the stocks' prices.

Source: Seeking Alpha

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