×

RBC strategist makes a bold, contrarian high-dividend call

Concern about the "pending disaster" coming for high-dividend stocks is overblown, the chief U.S. market strategist at RBC told CNBC on Tuesday.

While logic may dictate that those stocks should be more vulnerable to an interest rate hike by the Federal Reserve, Jonathan Golub said on "Worldwide Exchange" that rates are so low to begin with that any increase won't be that big a deal.

Despite the recent decline in REITS, utilities and telcos, Golub argued: "The market is just dying for yield, so it kind of ignores the movement in interest rates. I think they probably hold in way better than investors may think."


The notion of excessive valuations in high-dividend stocks is another concern Golub does not agree with, saying: "The valuation on those companies was exactly equal to the market."

If investors are still concerned about where high-dividend stocks are headed, Golub said to look at earnings performance.

"Because the economy is so lousy, the earnings of these dividend stocks was actually better than the rest of the markets. So some of the move up that they've had over the last several years was justified," he explained.

Bottom line, Golub predicts two stories for the market between now and some kind of fiscal stimulus from Washington.

"Prior to stimulus, consumer staples lead the market, even though they look frothy. But once rates are higher, bank stocks, discretionary and industrial names really start to hit it very hard," he said.