DTD could be ideally positioned to endure higher interest rates, should the Federal Reserve opt to resume that trend later this year. While a rise in rates would diminish the attractiveness of dividend stocks with premium valuations and low growth, more high quality dividend payers or the group of dividend growers may stand out.
Related: Dividend ETFs for a Stubbornly Low-Yield Environment
Stocks with steady yields reassure investors of a company’s strong financial health. Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return. Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
“This focus on all sizes of dividend payers has proven to be a great strategy. DTD has managed to provide a 13.2% annual total return over the last five years. Part of that has been its great monthly dividend — currently at 2.6%,” according to InvestorPlace.
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