Most investment professionals believe the Fed will hold off on raising rates, but if the Fed unveils a surprise hike on Wednesday afternoon, high-yielding stocks could be in big trouble.
A drop in interest rates, which is partially a result of the Federal Reserve's decision not to raise short-term rate targets thus far in 2016, have helped many high-dividend stocks to outperform this year. Yet if rates turn higher, dividend stocks can be expected to lose ground because they will compare less favorably with bonds.
The hardest-hit dividend names may prove to be those that are also trading at above-market valuations since these are the stocks that investors are more likely to be buying for their dividend alone, rather than for the attractiveness of their fundamentals.
When all the stocks in the S&P 500 are sliced and diced in this manner with data provided by FactSet, a few names stick out: