DIVIDEND STOCKS ARE READY TO REBOUND

Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.

- NELLIE S. HUANG

INVESTORS have ignored dividend stocks for the greater part of two years while visions of other investing sugarplums danced in their heads. Money market funds and Treasuries offered better yields for no risk, for a start, and then came the artificial intelligence boom in growth stocks, all of which "sucked the capital out of the rest of the market," says Jay Hatfield, chief executive of Infrastructure Capital Advisors and manager of the InfraCap Equity Income exchange-traded fund. Little wonder, then, that dividend stocks have lagged the S&P 500 in recent years.

But the tide seems to be turning, in part because interest rates are coming down, which helps to make dividend stocks more appealing. "Over the past two months, dividend stocks have taken off like a rocket," Hatfield says.

"We think this trend will continue." Indeed, investors have forgotten some truisms about dividend-stock investing. Over the long haul, for one, dividend-paying stocks have outpaced non-dividend payers, and they've been less volatile, too, says John Buckingham, editor of the investing newsletter The Prudent Speculator.

"Everyone's holy grail is higher returns and lower risk, and it's sitting right in front of us with dividend-paying stocks," he says. What's more, dividend payouts aren't static like bond-coupon payments; they increase over time. Over the past 10 years-a period that includes the pandemic, when many companies suspended dividendspayouts in the S&P 500 have increased by nearly 90%.

Enter the Dividend 15, the list of our favorite dividend-paying stocks, which we have been shepherding since 2017. Our picks fall into one of three categories. The stalwarts are steady payers that have racked up decades of consistent dividend hikes. The dividend growers boast sizable increases every year, and the potential for healthy stock-price appreciation. And then there are the high yielders, which offer big payouts.