Home / Business and Economy / Fed Rate Cut Looms: Income Investors Brace for Lower Yields
Fed Rate Cut Looms: Income Investors Brace for Lower Yields
8 Dec
Summary
- Federal funds traders anticipate an 87% chance of a Fed rate cut this week.
- Low interest rates make dividend-growing stocks essential for income investors.
- Schwab U.S. Dividend Equity ETF tracks companies with consistent dividend growth.
Federal funds traders are anticipating an 87% probability of an interest rate cut by the Federal Reserve this week, signaling a sustained period of lower yields. This anticipated move by the Fed, marking its third rate cut of 2025, is expected to make traditional high-yielding investments even scarcer.
In response to this evolving low-rate environment, dividend-growing stocks are becoming crucial for income investors. The Schwab U.S. Dividend Equity ETF (SCHD) is identified as a prime investment for diversified, growing income. This ETF tracks the Dow Jones U.S. Dividend 100 Index, focusing on 100 companies with at least a decade of consecutive dividend increases.
The SCHD fund prioritizes companies with strong fundamentals and consistent dividend growth, avoiding purely high-yield strategies. It holds well-known companies like Coca-Cola and Texas Instruments, which have recently increased their dividends above the inflation rate, offering a current yield of 3.8%.
