Home Most Popular 5% Yielding Dividend Aristocrat Bargains You Don't Want To Miss

5% Yielding Dividend Aristocrat Bargains You Don't Want To Miss

5% Yielding Dividend Aristocrat Bargains You Don't Want To Miss

As the Federal Reserve meets this week to discuss interest rates and economic forecasts, many investors are concerned about rising rates and their impact on stock prices.

In recent weeks, long-term interest rates have surged, leading to significant corrections in utilities and real estate investment trusts (REITs).

Why Are Rates Still Rising When The Fed Isn’t Hiking?

Despite indications that the Federal Reserve is not planning to raise rates in the near future, long-term interest rates are continuing to rise. This is due to the term premium, the risk premium that bond investors require for holding long-term bonds over short-term ones.

For years, the Federal Reserve had been purchasing large amounts of bonds, resulting in a compressed term premium. However, as the era of low rates and bond buying comes to an end, the term premium is naturally increasing to historically normal levels.

Currently, the inflation-adjusted or real yield on long-term bonds is around 2%, and it has been climbing for several months.

Why The Bond Market Is Losing Faith In The Fed

The bond market reflects its inflation expectations through various breakeven rates. These rates indicate that the market anticipates inflation ranging from 2.3% to 2.6% over the next 5% to 30 years. This suggests that a return to the Fed’s target of 2% inflation is unlikely.

Why The Fed Is Still Behind The Curve

Despite the Federal Reserve’s claims of being data-dependent, its current policy falls short of what many models suggest is appropriate for keeping inflation in check. While the Fed is gradually reducing its bond purchases, the impact of quantitative tightening is being offset by bank lending. This means that inflation is not expected to decrease significantly in the near term.

A-Rated High-Yield Aristocrats: The Ultimate Safe Long-Term Investment

In a higher interest rate environment, small companies are more vulnerable due to their higher capital costs and lower credit ratings. It is important for income investors to focus on stronger, healthier, and better-managed companies to ensure stable income and avoid potential risks.

How To Find The Best A-Rated High-Yield Aristocrat Buys

The Dividend Kings ZEUS Research Terminal provides a screening tool to identify the best A-rated high-yield dividend aristocrats. Through a systematic process of criteria application, a list of top-quality companies can be generated.

The 5 Best High-Yield A-Rated Dividend Aristocrat Buys

Based on the screening results, the following stocks are recommended as top picks:

  1. Enterprise Products Partners (EPD)
  2. Realty Income (O)
  3. Philip Morris International (PM)
  4. Fortis (FTS)
  5. Cullen/Frost Bankers (CFR)

Bottom Line: Invest Confidently in High-Yield A-Rated Dividend Aristocrats

Despite concerns about rising rates, these A-rated high-yield aristocrats offer stable income and long-term growth potential. By focusing on fundamentally sound companies, investors can mitigate risks and ensure a steady stream of dividends, regardless of fluctuations in interest rates or other market factors.