PTY - 2 Stocks Yielding Above 10% That Could Be Subject To Dividend Cut

2024-02-02 04:58:03 ET

Summary

• The Fed's recent message on interest rates was less accommodative than expected, but the key essence remains the same - interest rates have peaked and are set to go down this year.
• Yield-seeking investors could expect lower yields as the discount rate shrinks, that should prompt investment in high-yielding stocks now.
• However, investors have to still be careful before picking high-yielding positions as some of them might cut despite the relatively rosy outlook on the interest rate end.
• In this article I elaborate on two names, which yield above 10% and that in my opinion are likely to reduce their distributions quite soon.

Right before we entered February, the Fed delivered quite hawkish message relative to what was baked into the cake by the market. While it was not a surprise that there will not be any interest rate cuts now, the commentary on future decisions was not as accommodative as the market hoped for.

The chart above captures the essence very well, where we can see how the probabilities of an interest rate cut have steadily decreased, with another calibration to the downside happening right after the recent Fed meeting....

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