With rates across all bond sectors hitting all time lows and the economy still facing headwinds, investors are truly caught between a rock and a hard place. There is, however, a solution; high dividend paying Blue Chip stocks. Blue Chip Dividend paying stocks offer investors high quality, healthy balance sheets, above average income and the opportunity for meaningful price growth potential. These companies have record levels of cash on their balance sheets and due to their multi-national business segments they are not solely dependent on the U.S. economy for future growth opportunities.
With interest rates at such low levels, the dividend rate of many A+ rated stocks are above the 30 Year Treasury yield. Not only do these high quality issues offer investors the income they seek but they are also highly liquid. When interest rates and inflation begin to rise, these issues will not only maintain their value but likely rise in value as investors look to exit their bond funds and participate in the growing economy.
Ironically, in this scenario, corporate and long term bond funds will have lower liquidity and represent greater principal and opportunity risk to investors than their equity counterparts.
Please contact us for more information or to schedule an appointment.