Rising interest rates are improving income potential for savers

 

 

chart-dividend-yield-vs-treasury-yields

In late 2017, the two-year U.S. treasury yield rose above the S&P 500 Composite Index dividend yield for the first time in almost a decade. This trend has held through the first several months of 2018 as interest rates continue to gradually rise. For years, ultra-low bond yields have led investors to turn to equities to help produce income. However, rising interest rates are helping to generate more opportunities for fixed income investments to supplement equities, where overall dividend yields have been broadly unchanged. Income funds with the flexibility to invest in stocks and bonds along with traditional bond funds may help investors take advantage of rising rates to meet income needs.