How could Fed interest rate cuts impact dividend growing stocks?

[ "Blog: Latest Insights" ]
[ ]
[ ]
  • Chart on the Go

Download PDF

Companies that are growing dividends have historically performed well after the Fed cuts rates.

  • Historically, when the Federal Reserve has started to cut interest rates, companies that are growing their dividends have outperformed other stocks.


  • Dividends are an important part of total return, and when we head into an environment of Fed rate cuts, focusing on dividend growers may be a smart approach for investors seeking equity income.


Source: Bloomberg as of 12/31/23. Fed rates reflect Bloomberg Fed Funds Target Rate Index (FDTR Index) from 1973–2023. Fed cut defined when the FDTR Index month/month change is negative. Chart reflects average forward returns after every Fed rate cut. 3-month, 6-month and 12-month returns are cumulative. 24- and 36-month returns are annualized. Dividend growers, all dividend payers, non-dividend payers, SPX Equal Weight price data from Ned Davis Research. Past performance is not a guarantee of future results. It is not possible to invest directly in an index. Dividend payments are not guaranteed and the amount, if any, can vary over time.


Download as a client-approved PDF