Last week, the Federal Open Market Committee (FOMC) elected to reduce the amount of the Fed’s monthly asset purchases by another $10 billion, down to $55 billion per month. Fed Chair Janet Yellen stated in the post-FOMC press conference that she and the other Fed members see sufficient strength in economy to support further improvement in the labor market.
Fed officials predicted that their target interest rate would be 1% at the end of 2015 and 2.25% a year later. That was higher than was previously forecast, but the upgrade in their projections was based on gains in the labor market, and most FOMC participants restated their view that the Fed will not raise the benchmark interest rate until 2015.
The story going forward will be whether investors trust that the economy can grow organically to maintain equity valuations as the Fed pulls the punch bowl from the market over the next six months. Most would agree that they wouldn’t be tapering prematurely if they weren’t confident that the positive trends are sustainable.
Yellen’s comments caused a brief volatility spike last week, and as the Fed tapers further, it is likely that higher levels of volatility will be brought to the market. That’s why I recommended that investors concentrate on stable, blue-chip dividend stocks with a long history of paying investors solid, dependable dividends.
For solid quarterly income, not to mention the potential for capital appreciation, take a look at the highest-yielding dividend stocks of the Dow Jones Industrials. These well-known, best-of-breed companies can virtually guarantee that their payouts will hit your account each and every pay date.
The top 10 highest-yielding Dow dividend stocks, or “Dogs of the Dow,” pay out sizable yields ranging from 3.17% to 5.40%, and they’re often less susceptible to market downtrends, which makes them ideal holdings when so many investors are confused about future impact of the Fed’s monetary policy on equity markets.
Here are the top 10 Dow dividend stocks by yield for March. (Note: All yields and returns are as of 3/21.)