With the US CPI data exceeding expectations on Wednesday, speculation about the magnitude of the Fed's interest rate cut next week is nearing a conclusion.

At a time when Federal Reserve officials remain silent, Nick Timiraos, a well-known macroeconomic journalist known as the "Fed megaphone", wrote on Wednesday that the continued weakening trend of inflation has paved the way for the Fed to gradually reduce interest rates starting next week. However, the unexpected rise in housing inflation makes it difficult for officials to push for a larger rate cut.

The most mainstream expectation is for the Fed to cut interest rates by a total of 100 basis points this year, which means that there will be at least one 50 basis points cut in the next three meetings.

As the Fed's interest rate cut cycle approaches, many savvy investors are also looking for new opportunities. In addition to the introduction mentioned earlier 医疗股,公共事业股,Consumer staples.,Communication services,Financial stocksIn addition to investment opportunities in multiple industries, high dividend stocks are also beneficiaries of interest rate cuts.

In an interest rate cut cycle, high dividend assets are often highly regarded due to their unique income characteristics. In a low interest rate environment, high dividend stocks can still provide investors with stable cash flow and relatively robust returns, making them a winning choice that can span cycles.

Top ten 'cash and dividends' US stocks revealed

Tracking the S&P Dividend Aristocrats Index $Spdr Series Trust Spdr Portfolio S&P 500 High Dividend Etf (SPYD.US)$ It has risen by more than 16% year-to-date, outperforming. $S&P 500 Index (.SPX.US)$ Nvidia. $iShares 20+ Year Treasury Bond ETF (TLT.US)$.

According to Simply Safe Dividends data, 53 companies are included in the Dividend Kings list for 2024 (Dividend Kings are defined as stocks that have increased dividends for at least 50 consecutive years).

From the performance ranking, the world's largest retail giant $Walmart (WMT.US)$ has accumulated a growth rate of 51%, while the US manufacturing giant $3M (MMM.US)$ , tobacco giant $Altria (MO.US)$All have risen more than 40%, including the American consumer product giant $Colgate-Palmolive (CL.US)$, insurance giant $Cincinnati Financial (CINF.US)$ , pharmaceutical giant $AbbVie (ABBV.US)$ has risen more than 30%; American manufacturing giant $Parker Hannifin (PH.US)$ , the giant of global hygiene products $Kimberly-Clark (KMB.US)$ , the giant of global daily chemical products $Procter & Gamble (PG.US)$, a beverage giant coca-cola (KO.US) with increases of more than 20%.

It is worth noting that, except for 3m, these dividend aristocrats have all reached historical highs during the year.

Additionally, interestingly, as shown in the above chart, over half of the companies are from the consumer staples industry. The previous article has also mentioned that consumer staples refer to essential goods in life, including food, medicine, clothing, housewares, etc., which are essential commodities for people's survival.

Since these goods are essential necessities of life, regardless of the economic situation, people are unlikely to reduce spending in these areas. In terms of investment, the consumer staples industry is similar to financial and medical care industries, belonging to defensive assets with strong resistance to downturns.

In addition to investing in individual stocks, for investors who are not proficient in stock selection, there is a more stable and secure way of stock investment - high dividend ETFs, including $Schwab US Dividend Equity ETF (SCHD.US)$Please use your Futubull account to access the feature.$Ishares Trust Ishares Core High Dividend (HDV.US)$Please use your Futubull account to access the feature.$Ishares Select Dividend ETF (DVY.US)$Please use your Futubull account to access the feature.$Spdr S&P Dividend Etf (SDY.US)$Please use your Futubull account to access the feature.$Vanguard High Dividend Yield ETF (VYM.US)$Please use your Futubull account to access the feature.$Spdr Series Trust Spdr Portfolio S&P 500 High Dividend Etf (SPYD.US)$Please use your Futubull account to access the feature.$Vanguard International High Dividend Yield Etf (VYMI.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.

However, it is worth noting that the dividend stock ETFs in the US market receive tax advantages for mainland investors, who only need to pay 10% dividend tax, while investors in regions such as Hong Kong and Singapore need to pay 30% dividend tax.

Why do high dividend stocks have profit-making effects during interest rate cuts?

During interest rate cuts, high dividend stocks usually perform well, mainly for the following reasons:

• Alternative to fixed income: When interest rates decline, the return on traditional fixed income investments, such as bonds, also declines. This makes high dividend stocks relatively more attractive, as they provide higher cash returns.

• Investor preference: During periods of economic slowdown or increased uncertainty, investors often seek more stable sources of income, and high dividend stocks usually come from companies with stable cash flows and mature business models, thus becoming preferred investments.

• Defensive characteristics: High dividend stocks often have defensive characteristics because they come from industries that can maintain stable dividends even during economic downturns, such as utilities and essential consumer goods industries.

In conclusion, high dividend stocks tend to perform well during a rate-cutting cycle because they provide stable cash flow and relatively lower risk. This aligns with the investment characteristics that investors seek when interest rates are falling.

How to find high dividend stocks that you like? 3 tools to help you easily deploy.

Futubull hasHigh Dividend Yield Ranking,Dividend Payment Calendar,Dividend Payment RecordThree treasure trove functions for mooers to deploy all in one stop.

Is the US expected to cut interest rates? Interest rate-sensitive long bonds, small-value stocks, biotech stocks and other assets have benefited from the rebound, and savvy investors who have deployed early have already gained profits! If you are still unsure about which assets to allocate during an interest rate cut cycle? How to allocate?Take a look at the "Interest Rate Investment Lazy Pack" course, which comes with the most comprehensive guide >>.

Editor/Somer