As many income-focused investors may have noticed, the past few months have not been friendly to high-yielding securities overall. In a rising interest rate environment, any security which acts like a bond is likely to be treated like one by the market, and as such, will have experienced a corresponding decline as investors wait to see just how high interest rates will go before jumping into any high-yielding equity at this point in time.
I, however, believe that now is an excellent time to be buying yield, considering the fact that specific central banks are now indicating that raising rates steadily over the next few years may not be in the cards due to the susceptibility of this new-age economy to higher interest rates.
As household debt levels have continued to climb, the ability of borrowers to repay larger debt loads will become restricted and potentially lead to a correction or recession, leading many to believe we may be approaching a ceiling in terms of interest rate hikes for the time being.
For investors interested at buying a portfolio of dividend yielding stocks, buying into an exchange traded fund (ETF) such as iShares U.S. High Dividend Equity Index ETF (CAD-Hedged) is one way of gaining exposure to equities with high yields and the U.S. market, without garnering exposure to currency fluctuations between the two countries.
Invest wisely, my friends.
