Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 2
Hi Bob - Here's how I see it.

Growth companies with insignificant dividends (aapl, orcl...) that continue to exhibit growth will offer attractive returns under most market conditions over a long enough time frame and won't be directly affected by increased interest rates. But indirect effects can become significant if rates get high enough for long enough.

Growth companies with significant dividends that continue to exhibit growth will languish as rates increase, unless their growth is exceptional (which is unlikely).

Growth companies that stop growing or start shrinking will destroy a portfolio whether they pay dividends or not. The list of companies that were at one time viewed as "strong" that are now either gone or on life support is long.

So, buying strong companies that are likely to keep getting stronger is a good strategy under all economic conditions if you have a long enough time horizon. The trick is figuring out when it's time to move on to stronger companies and let the old favorites go.

But for shorter investment horizons, I don't accept that strong dividend paying companies are the right choice for every economic situation. They've been good for a while now. But it's close to time to move on.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.