The impending rate hike has made bargains of some income names

The latest commentary from the Federal Reserve helped soothe the market’s anxiety about the impending rate hike, but it wasn’t enough to let dividend stocks off the hook.

Dividend payers like utilities, real estate investment trusts and telecoms are getting shellacked in anticipation of the Fed raising interest rates for the first time in almost a decade — and deservedly so. After all, dividend stocks compete with bonds for investors’ dollars, and bond prices fall when interest rates rise.

Happily, the general downdraft in dividend stocks has unduly punished a number of high-quality names with generous payouts. There’s nothing quite like a beaten-down dividend stock for outsized total-return potential, so it usually pays to hunt for any names on sale.

As much as rate-hike pressure might tamp down performance in the shorter term, that headwind will eventually pass, unleashing market-beating returns for any number of dividend stocks.

Besides, it’s not automatic that dividend stocks must drop on a rate hike. Indeed, dividend payers in pro-cyclical sectors like industrials and materials tend to rise. Don’t forget: The central bank raises rates because the economy and prices are picking up steam — two things that are good for corporate revenues.

With all that in mind, we scoured the S&P 500 for beaten-down dividend stocks with compelling fundamentals and valuations. True, these names may suffer in the intermediate term because of the rising-rate environment, but they also look like bargains. Between rising share prices and generous payouts, these dividend stocks are set for outsized total returns if held long enough.

…..read page 2 HERE