No. of Recommendations: 1
Utilities are paying nice dividends right now, and so are preferred stocks.

I question whether they contain a danger similar to bond funds: If interest rates go up, the stocks (my principle) will go down.

There are actually at least three possible risks as interest rates rise;

1) Like you mentioned, if a stock is paying a dollar a year in dividends, then it will look less favorable as interest rates go up.

2) If the company has a lot of debt, then eventually their borrowing costs will go up as interest rates increase so their financial numbers may suffer.

3) If inflation is part of the reason for the interest rates going up, then the dividend will be devalued unless it increases too. For example if a company pays a steady $1.00 dividend, and inflation is 5%, then next year the dividend would need to be $1.05 just to stay the same in inflation adjusted numbers.

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