Barclays: These Stocks Are Most At Risk From Interest Rate Hikes

For dividend investors, rising long-term interest rates do represent a risk factor. In a rising interest-rate environment, high-dividend-paying stocks have historically underperformed their lower-yielding and non-dividend-paying counterparts; cash flows out of higher yielding riskier assets in favor of lower-risk assets.

The opposite is true when rates are falling or constant. This trend can be seen clearly over the past five or six years. Investors have been chasing yield since 2009, pushing up the prices of the stocks with a higher than average yield that they perceive to be safe.

Interest rates: Supporting data

Alex Bryan of Morningstar has put together some interesting data on this trend.

Alex Bryan looked at the return data for non-dividend-paying stocks, dividend-paying stocks representing the 30% with the...