With another Federal Reserve rate hike looming, investors need to be suspicious of low-volatility stocks that pay high dividends, Wealth Enhancement Group chief investment officer Jim Cahn said Thursday.
That's because bond investors have piled into the stocks, which have done well over the past two years, he explained.
"The problem is, once interest rates start to rise, a lot of investors that favored these … consumer discretionary and also utilities stocks are going to pile right back out of those names back into bonds," Cahn said in an interview with CNBC's "Closing Bell."
On Thursday, New York Fed President William Dudley said the central bank is likely to raise interest rates this summer if the economy meets its expectations.
"June is definitely a live meeting," Dudley, a voting member of the Federal Open Market Committee, said.
His comments followed Wednesday's release of the Fed's April meeting minutes that said a June rate increase was likely if data improves.
Rate hike concerns sent stocks lower Thursday, with the S&P 500 erasing gains for the year so far.