6 Dividend Growth Stocks to Stay Ahead of Rising Interest Rates

For years, America’s low-interest-rate environment has pushed income hunters out of bonds and into other cash-producing investments – namely, dividend stocks.

WASHINGTON - JANUARY 22:In an effort to provide some relief to U.S. and international markets, the Federal Reserve Bank cut interest rates January 22, 2008 in Washington, DC. The Fed cut its
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For years, America’s low-interest-rate environment has pushed income hunters out of bonds and into other cash-producing investments – namely, dividend stocks. However, the Federal Reserve has been slowly turning the volume back up on interest rates, and did so again Wednesday, Dec. 13, at the conclusion of the Federal Open Market Committee meeting.

The Fed raised its benchmark interest rate by another quarter-point, marking the third increase to the Fed funds rate in 2017, and the fifth since the Federal Reserve started budging two years ago. The central banking system now targets a 1.25%-1.5% interest-rate level, up from 0%-0.25% as recently as 2015, and senior officials expect the Fed to execute three more rate hikes in 2018.

As interest rates rise, more income investors may be tempted to flee dividend-paying companies for the perceived safety of higher-yielding bonds. But you don’t have to shift to debt – several dividend stocks should remain plenty competitive.

History has shown companies with a record of consistently raising their dividends can offset much of the negative effect of rising rates. Moreover, certain companies may be able to compound the benefits of an improving economy with their growing payouts. Here are six dividend growth stocks that should withstand the Fed’s continued push on interest rates.

Data is as of Jan. 1, 2017. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Stocks are listed in alphabetical order. Click on ticker-symbol links in each slide for current share prices and more.

Ken Berman
Contributing Writer, Kiplinger.com
Email: ken.berman@gorillatrades.com
Website: gorillatrades.com (opens in new tab)
LinkedIn: Gorilla Trades (opens in new tab)
Phone: (866) 222-6639

Ken Berman has been buying and selling stocks since he was a teenager and met with early success trading then-fledgling biotech stocks like Amgen, Biogen and Immunex. He later became a broker and worked for two wire houses, where he developed a proprietary system for buying and selling equities. In 1999, Mr. Berman formalized his method under the Gorilla Trades name and now has subscribers in the U.S. and 55 other countries around the world.