As with everything else in the world, it depends is a good answer. Since 2008, government treasuries, the most secure debt instruments (the government can raise taxes to pay the interest) have been close to 0%. With that yield, almost everything else looked good that was positive. If you lost money then even 0% looks good. US Treasuries interest rates and yields have been to move up to 3% which makes the depend answer more tricky. Typically, dividend stocks return about 3%, but there was the good aspect of higher stock prices to produce a total return often above 3%. Now that US Treasuries are 3% do you shift to begin buying bonds?

According to Ian McGuggan writing in the Globe and Mail the Federal Reserve is expected to hike interest rates up at least twice more in 2018 as it combats rising inflation. Although with elections being held in November, maybe the second hike will be later. For the second hike the politicians want to ensure the low interest rates which helped fuel the economy is not being hurt. It is important to note as interest rises, neither stocks or bonds thrive. Bond prices move in opposite direction to yields. Stocks are hurt because higher interest rates means higher corporate interest payments. Then the issue of how much debt a company has and should have are raised again.

Linking to dividend paying stocks, while buying stocks, it is better to buy a company with growth rates plus pay dividends as interest rates go up, there is a risk. If you do not know what to do, you can little for as the cash comes in from the dividends there is no reason why you have to spend it. You can wait until a great opportunity from the homework you have done comes forward. This makes it all the more important to be aware of the alternatives and what alternative would you buy and at what price?

There are more questions than answers, till the next time – to raising questions.