What to Expect as Interest Rates Rise
Even if interest rates continue to rise, investors can expect rewarding long-run results from firms with growing dividends, says Morningstar's Josh Peters.
A version of the following article first appeared in the August 2013 issue of Morningstar DividendInvestor. Download a complimentary copy of DividendInvestor here.
We all knew interest rates would eventually go up, but that doesn't mean the move this year has been pleasant. Since May 1, when the yield on 10-year Treasury bonds hit its low for the year (1.61%), long-term rates have risen by more than a full percentage point. This riled the bond market, where investors have suffered losses from their bond holdings. The impact on the stock market--in general--has been less troublesome: Volatility increased for a while, but the S&P 500 has gone on to reach all-time highs.