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Fund Spy

Will Rising Bond Yields Sink High-Dividend Stocks?

Conventional wisdom holds that higher rates will hurt stocks with high dividend yields, but we find the supporting evidence rather weak.

A market commentator wrote on Jan 18, 2017, that

"A stock that has no growth prospects and relies solely on future income expectations in determining its value closely resembles a bond or other fixed-income investment. Therefore, such stocks typically trade in line with the bond market. Rising rates hurt the price of bonds, and so stocks in low-growth industries also often fall in rising-rate environments."