Clearly, the market was disappointed with Bernanke's quarter-point cut on Tuesday. But I've got to believe that Gentle Ben isn't done cutting yet ... not when so many economic indicators look as bad as they do.
In fact, I think we're going to get a few more cuts in the first half of 2008. Bad news for savers; good news for dividend investors. Why? Because lower interest rates make traditional income investments like CDs and money markets far less attractive.
Conversely, dividend stocks -- many of which are offering large yields because of market weakness -- look better and better!
Plus, certain dividend-centric sectors, such as utilities, rely heavily on borrowing to fund their businesses. In other words, lower interest rates benefit these stocks both fundamentally and in terms of investor perception.
Talk about a win-win!
Thursday, December 13, 2007
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