Long-term bonds are so passé. At least, that’s what financial experts are beginning to believe. Investors may want to consider the benefits investing in dividend-paying growth stocks and related exchange traded funds (ETFs) instead.
The Feds will likely raise interest rates this year as a way to finance the ballooning federal debt from all that economic stimulus, writes Eve Mitchel for Philly. Generally, when interest rates rise, investments such as bonds, Treasuries and long-term bond portfolios become less lucrative.
Karl Mills, president and chief investment officer of Jurika Mills & Keifer investment firm, thinks investors should consider stocks that pay dividends to replace income payments that would have come from bonds. [Why dividend ETFs are portfolio-compatible.]
Mills also suggests technology, pharmaceuticals and global companies as good investments. Technology companies are thought to have reasonable valuations and the ability to grow, and pharmaceutical firms are currently very cheap, notes Mills. [12 ETFs for 10 economic surprises.]
Henry Gold, president of San Francisco’s betterinvesting.org nonprofit investment educator, also believes that now isn’t the time to get into fixed-income and bonds; however, he and Mills both think that short-term fixed incomes can still remain an option for investors. Gold urges investors to look for “companies that have managed to keep the top line and bottom line growing” – keep an eye on an investment’s revenue and stock earnings growth. [A solid 2010 for dividend ETFs?]