Dividend stocks are expected to pop as the Fed lowers rates. How to shop for the right ones

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Income investors will turn to dividend payers as rates come down, but there's more to finding the right stock than just focusing on yields.

With markets widely expecting the Federal Reserve to cut interest rates at its September meeting, dividend-paying stocks are about to get their moment in the sun. Fed funds futures trading data suggests a rate cut from the current range of 5.25% to 5.5% is a certainty next month, according to the CME FedWatch Tool .

line NOBL ETF vs the S & P 500 in 2024 Investors should be discerning as they shop for these dividend-paying names and avoid the siren call of names that have high yields that are too good to last. Not all dividend payers are alike High dividend yields may be eye-catching at first, but they should prompt questions from investors.

 

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This group of dividend stocks outperform when the Fed starts cutting ratesStocks that have consistently raised their dividend in each of the past 25 years have performed best when interest rate policy loosens, Wolfe Research said.
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These income plays could do better than money market funds when the Fed cuts ratesMoney market funds have grown above $6 trillion, but they could be less attractive as interest rates fall.
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