The Federal Reserve is hinting at a rate cut in September, making dividend stocks attractive

From Nasdaq: 2024-08-27 21:02:30

In March 2022, the Federal Reserve began an aggressive rate-tightening cycle, leading to market uncertainty around a potential rate cut. However, Fed Chair Jerome Powell hinted at a rate cut in September during the Jackson Hole Symposium, setting the stage for lower interest rates to come.

Stocks set to benefit from falling interest rates include growth stocks, rate-sensitive sectors like real estate and automotive, and dividend stocks. Ford, with a dividend yield of 5.4%, has a strong payout policy, while General Motors focuses on share buybacks despite a lower dividend yield. Ford generates healthy cash flows and is expected to pay a stable dividend with potential for a special dividend.

Ford’s stock trades at a low valuation despite concerns about its traditional ICE business and losses in the EV segment. While facing challenges such as warranty and labor issues, Ford is working on its turnaround strategy under CEO Jim Farley’s leadership. The company’s diversified product portfolio and potential for capturing demand across different vehicle segments make it an attractive buy option, especially with a dividend yield over 5% amid expected monetary policy easing.



Read more at Nasdaq: 1 Dividend Stock Yielding Over 5% to Buy Before the September Rate Cut