From Morningstar: 2024-09-04 04:59:00

The US stock market is still on an upward trend, driven by big tech, causing dividend stocks to underperform. Strategists suggest that as the market rotates, dividend stocks could provide stability and returns. The Federal Reserve is expected to lower interest rates, which could further benefit dividend investors by making yields more attractive.

Dividend-paying stocks have historically lagged behind high-flying tech stocks, but recent market dynamics suggest a shift towards value stocks and high-quality companies, including dividend stocks. Investors can look for companies with sustainable dividend growth potential for long-term returns. Falling interest rates could make dividend yields more appealing compared to bonds, benefiting dividend-paying firms.

In a market characterized by volatility, dividend stocks can provide predictability and ballast for investors. Companies like Alphabet and Meta Platforms have recently announced dividends, joining a growing list of tech firms returning cash to investors. Dividend stocks may not offer high yields immediately, but they have the potential for powerful long-term compounding returns. Clarfeld advocates for total return, incorporating dividend reinvestment over time for balanced portfolios.



Read more at Morningstar: Is a US Dividend Stock Comeback on The Cards?