The selloff in dividend stocks has accelerated as bond yields become more attractive on a relative risk-reward basis. Sectors including real estate, utilities, and materials have seen stock prices plummet, according to CNBC.
Investors have poured over $3.2 billion into the iShares 20+ Year Treasury ETF (TLT) in the past month — its largest monthly inflows on record — as its yield hit the highest since 2002, according to Dow Jones data. Simultaneously, ultrashort bond funds drew record inflows near $20 billion in September, according to Morningstar, reflecting a split between investors seeking safety and those betting the worst in bonds is over.
Timothy Chubb, chief investment officer at Girard, a Univest Wealth Division, cautioned retirees against panic selling. "The worst thing that a retiree could do is sell a high-quality dividend payer at depressed prices to chase income somewhere else in the stock market just to get higher yield," Chubb said.
He advised investors to focus on fundamental earnings growth rather than chasing the highest yields. "I'd much rather get a company going up 4% to 5% with another 3% in dividend yield than chasing an 8% dividend yield for a business that's in decline," he added.
Financial advisors recommend that boomers not abandon dividend stocks entirely but instead be selective, emphasizing quality companies that can sustain and grow their dividends over time.