Arabic version: ارتفاع عوائد السندات يضغط على أسهم توزيعات الأرباح للمتقاعدين
According to Cnbc, the rapid rise in bond yields led by the 10-year U.S. Treasury has made dividend stocks less attractive as income investments, pressuring sectors including real estate, utilities and materials. The shift has raised concerns for older investors who rely on dividend stocks and funds for part of their income.
Timothy Chubb, chief investment officer at Girard, a Univest Wealth Division, said many dividend funds are giving back gains from earlier in the year, when bond rates were lower. He cautioned retirees against selling high-quality dividend payers at depressed prices simply to pursue higher yields elsewhere. Instead, he said investors should focus on fundamental earnings growth, dividend growth and whether a company can fund payouts through business cash flow rather than debt.
The performance of dividend ETFs has varied. The Invesco S&P 500 High Dividend Low Volatility ETF had a negative one-month return of 7.59% and was up around 4% year to date. Vanguard High Dividend Yield Index ETF had a negative one-month return of 3.85% and was up about 11% year to date, while the WisdomTree US Quality Dividend Growth Fund had a negative one-month return of 0.81% and was up 11% year to date. Funds emphasizing a history of payout growth include Vanguard Dividend Appreciation ETF, which requires at least 10 consecutive years of dividend increases, and ProShares S&P 500 Dividend Aristocrats ETF, which requires at least 25 years.
Bonds have also drawn investor interest. The iShares 20+ Year Treasury ETF took in more than $3.2 billion in net inflows over the past month, while ultrashort bond funds had record inflows near $20 billion in September, according to Morningstar. With 10-year Treasury yields above 5% and corporate bonds yielding around 6%, Bill Baynard of Novare Capital Management said intermediate-duration corporate bonds could offer an opportunity. Matthew Liebman of Amplius Wealth Advisors said investors should not buy anything solely for yield and instead consider total return, combining high-quality stocks, high-quality bonds and cash-flow planning.
