Dividend stocks — particularly telecom companies and utilities — flourished during the past couple of years, thanks to the Fed’s low interest rate policies and an economy emerging from the Great Recession. But this quest for safety and high yield had a predictable consequence: Many of these stocks have been extremely overbought.
Worries that the Fed would accelerate its so-called “tapering” sparked a selloff in some of the most reliable dividend-paying stocks. As a result, the valuations of these dull darlings are more attractive these days, presenting a good opportunity for income investors.
For income investors — particularly those nearing retirement — dividend stocks are a valuable part of their portfolios. After all, they boast the double benefit not only of providing reliable payments that can be reinvested, but many top dividend stocks — particularly utilities — are mature and stable, they and offer a hedge of protection in times of volatility.
Some of the best bets now are reliable dividend stocks that have taken some lumps in the market in recent weeks. Here are five battered dividend stocks to buy now: