Portfolio manager and director of research Don Newman discusses the outlook for dividend-paying companies and dividend yields as the environment begins to change with the rollout of the vaccine. Don manages Fidelity Dividend Plus Fund, and he thinks the current dividend landscape looks good. A reopening trade is happening, which can be great for dividend stocks; interest rates are moving up; valuations and yields are both looking good; and there is, he adds, a compelling yield argument right now. As for inflation, Don thinks that the most critical thing is to protect a client’s purchasing power. A good way to do this is to invest in a dividend fund; as the prices rise, you can see more income through the dividend stream. Don currently holds more commodities than the average dividend fund manager. Commodities are cheap on a relative basis and very “under-owned” right now. He wouldn’t call what we are seeing a super-cycle, but he believes there has been underinvestment in the area in the last five to ten years. 

Recorded on March 11, 2021.