As U.S. government bond yields inch higher in anticipation of the Fed rate hike later in the year, dividend investors have been hedging their bets.
“Equity investments that are kind of masquerading as a bond…are going to be the most vulnerable,” Tim Courtney, chief investment officer at Exencial Wealth Advisors, said in the article. “They’ve had a huge run and now they’re going to have competition” from bond investments as rates rise.
Courtney argues that investments most susceptible to a rate-induced sell-off will include stocks with dividend yields of around 3% since they will compete most directly with corporate and government bonds.
XLU has a 3.44% 12-month yield and VNQ has a 3.75% 12-month yield.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.