What to Consider When Buying a Dividend Stock Fund
They are attractive, but investors should pay heed to more than yield.
They are attractive, but investors should pay heed to more than yield.
With the Morningstar U.S. Corporate Bond Index’s yield to maturity at 2.18% as of September 2021, and long-term inflation expectations ranging from 2.4% to 2.5%, bonds are not very appealing. In the short run, they can also hurt if interest rates surge. When the 10-Year Treasury yield more than tripled to its recent high of 1.74% between August 2020 and March 2021, the Morningstar U.S. Corporate Bond Index lost 4.1%, while the Morningstar U.S. Large-Mid Index gained 20.5%. Although bond investors can make some of that money back when they invest at higher rates, their long-term prospects are still meager.
Alec Lucas does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.