September 2, 2020

5 Stable Dividend Stocks to Buy as Fixed Income Vanishes

 

Bond yields are at all-time lows, but these dividend stocks are stable alternatives



 

Income in the bond market is rapidly disappearing, and that’s a weird concept to try and wrap your head around.

 

For decades — centuries, even — investors around the world have bought fixed-income instruments for relatively risk-free income. The concept is simple. You give money to a government or corporate entity who turns around and pays you interest for lending that money to compensate for risk and time.

 

But this simple concept has been flipped on its head recently. Specifically, the “interest” part of the above fixed-income equation has gone out the window. Consider the following:

 

-The 10-year Treasury yield is around 0.6%.

-The 30-year Treasury yield has plunged to all-time lows around 1.3%.

 

In other words, across the world, the income part of the fixed-income equation is rapidly disappearing. Weird, right?

 

Despite this, U.S. equities are still giving investors income. That is, the S&P 500‘s dividend yield presently hovers just below 2% — significantly above all-time low levels (roughly 1% in 2000) and also on the upper end of where the S&P 500 dividend yield has hovered over the past 20 years.

 

Big picture, then, while the fixed income market is suffering from disappearing income, some stocks are still paying good income.

 

 

 

 

The implication? Buy stable dividend stocks that pay more than any other relatively risk-free bond in the world will. As investors grow tired of not even beating inflation by buying a 10-year Treasury note, they will inevitably pile into stocks which: 1) have much higher yields, and 2) have a history of steady and consistent dividend hikes.

 

Without further ado, let’s take a look at five dividend stocks that fit this description.

 

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