Q: 12:06 PM 12/6/2014
Hello Peter
It is said repeatedly that stocks in interest sensitive sectors like banks, pipelines, power producers, utilities, and real estate, will suffer if interest rates rise in the years ahead.
It would seem to me that with today's remarkably low rates that any responsible company officials and boards of directors would be securing all necessary very long term low interest rate financing for a decade or more in advance. Surely they would be irresponsible and negligent not to.
Fixed Income is the only real income investing option other than stocks. Bond yields would have to rise to the 5+% range to be any real competition for Dividends in the 4-5% range, and that seems unlikely in the next 5 years or more [just look at Japan] given all the almost unpayable Government debts in most countries.
So why then are "interest sensitive" stocks vulnerable?
I really have little option but to invest in these large companies with good dividends for ongoing income. So should we be concerned?
Many thanks....... Paul K
Hello Peter
It is said repeatedly that stocks in interest sensitive sectors like banks, pipelines, power producers, utilities, and real estate, will suffer if interest rates rise in the years ahead.
It would seem to me that with today's remarkably low rates that any responsible company officials and boards of directors would be securing all necessary very long term low interest rate financing for a decade or more in advance. Surely they would be irresponsible and negligent not to.
Fixed Income is the only real income investing option other than stocks. Bond yields would have to rise to the 5+% range to be any real competition for Dividends in the 4-5% range, and that seems unlikely in the next 5 years or more [just look at Japan] given all the almost unpayable Government debts in most countries.
So why then are "interest sensitive" stocks vulnerable?
I really have little option but to invest in these large companies with good dividends for ongoing income. So should we be concerned?
Many thanks....... Paul K