Eyeing Bonds Because of High Interest Rates? Try These 2 Dividend Stocks Instead

The Federal Reserve (Fed) is the central bank of the U.S., responsible for regulating banks, implementing monetary policy, and maintaining the financial system's stability. One aspect of the latter is controlling the country's inflation levels, which can broadly be done by adjusting interest rates.

The Fed has been increasing interest rates since March 2022 to combat rising inflation. As of mid-November 2023, the Fed's target interest rate range is 5.25% to 5.50%. This can be a gift and a curse, though. The curse is that it makes debt like credit cards, mortgages, and auto loans more expensive. The gift is that fixed-income investments like bonds now offer higher interest rates.

With high interest rates, investors may naturally gravitate toward bonds because of their low risk and predictable returns. However, this shift may overlook another compelling option: dividend stocks. Altria Group (NYSE: MO) and AT (NYSE: T) could provide better options for investors eyeing long-term growth and steady income.

Continue reading

Source Fool.com