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ETF Specialist

Should Dividend Investors Sweat Interest-Rate Risk?

Owning quality companies that regularly return cash to shareholders is a solid strategy for all rate environments.

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A version of this article previously appeared in the October 2019 issue of Morningstar ETFInvestor. Download a copy here.

There's a lot to like about dividends. Getting a regular check in the mail from the companies you own is a testament to their discipline, the health of their business, and their confidence in its future. But the stock prices of firms with stable cash flows tend to be more sensitive to fluctuations in interest rates than those with more-volatile cash flow streams. Here, I'll examine this relationship in more detail to understand whether it's something investors should sweat over.

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Ben Johnson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.