Dividend stocks often appeal to investors who want steady income and long-term growth. And 2024 is shaping up to be a good year for them: Analysts and fund managers are generally bullish , citing factors such as lower interest rates, which is good for stocks. Dividend stocks came under the spotlight after Meta unexpectedly announced a dividend for the first time. BofA has also been bullish on dividend stocks lately, saying investors may flock back to such stocks for income if yields fall this year, in turn driving up this segment of stocks. “Retirees have shifted assets to cash for income, but an easing cycle could drive them to equity income funds,” BofA said in a February note. “Trillions of USD of retiree cash could shift into equity income if short rates fall below 5% (the apparent tipping point),” it wrote. Wall Street and other pros share their tips on how to pick good dividend stocks and what names will generate sustainable income. How to pick dividend stocks Brian Stutland, portfolio manager of the Rational Equity Armor Fund, says his strategy is to go beyond traditional dividend havens by balancing yield and growth. “While chasing purely high yields can be tempting for a stream of income, prioritizing companies with sustainable dividends and growth potential offers a more balanced approach because I just don’t want the stock paying me back my own money,” he told CNBC Pro. In fact, using that strategy mitigates the risk of relying only on dividend income if higher rates affect dividend distributions, according to Stutland. His fund’s primary goal is seeking dividend income, but also uses hedging strategies to manage risk. It’s among this week’s top performers so far, ranking in the top 5% of options trading funds, according to Morningstar. Goldman says that based on an analysis of historical dividend initiations, companies are more likely to declare a dividend if they are large, profit margins are high, they buy back shares, have stable earnings…
2024-02-20 18:20:00
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