Navigating rough terrain

Question: How do the stocks of dividend-paying companies typically fare in a rising-rate environment?

Dan Peris: We're often asked that question about, 'Hey, what's going to happen when rates rise?' And I say, 'Well, it's a little bit hard to tell.' Rates haven't risen in a significant fashion for 40 years. So you need to go back and look at the data sets from the 1960s and '70s. And really, they describe a different time period so it's not clear that they would be significant in answering that question.

Dan Peris: The way I like to think about it is in terms of risk. Yes, interest rates may be going up, they may be going down, near term interest rates versus the 10-year, which is the more important rate for equities. I really don't know where the 10-year is going, but I do believe that risk rates are rising and that's part of the explanation for why dividend-focused securities are returning to favor. And that's because these types of companies with steady cash flows, established businesses, simply represent less overall generalized business risk than some of the very hot, very popular stocks that have dominated the news headlines in the marketplace for the last four or five years.