This article was first published on Real Money on Nov. 10 at 1:30 p.m. ET
The combination of a Trump victory and Republican control of Congress was a surprise to many investors, this week. One of the biggest moves we've seen since is the 26 basis-point increase in the yield of the benchmark, 10-year U.S. Treasury note, to 2.09%.
This is the first time the bonds, which yielded just 1.6% at the end of the third quarter, have offered more than 2% to investors since January. While the Dow Jones Industrial Average has rallied 365 points since word of the Trump victory, dividend-paying stocks are one area of the market that has lagged, as rising bond yields offer direct competition for investors' dollars.
Whether it's retirees looking for consistent income from a savings nest egg or investors with a generally lower risk appetite, many folks are seeing losses in "stable" dividend stocks like energy utilities in the past two days that are equal to the amount of dividend income expected for an entire year.
For example, Duke Energy (DUK) , the North Carolina-based utility, which is one of the largest in the S&P 500 index, has declined $4.28 a share -- or 5.3% -- over the past two trading sessions. In comparison, the company has an indicated annual dividend rate of just $3.42 a share, or a 4.5% yield.
With that in mind, higher long-term interest rates will need to cause investors to shift their thinking away from chasing the highest yields available and toward companies with higher earnings and dividend growth potential.