The Federal Reserve has indicated that a federal funds rate increase is likely in December. A rate increase will affect all aspects of the U.S. financial market in various ways. In a recent interview, Jay Kaplan of Royce Funds discussed his insight on what a rate increase will do for dividend-paying stocks.
Kaplan is the lead portfolio manager for the Royce Dividend Value Fund which is co-managed with Chuck Royce (Trades, Portfolio). Year to date the Dividend Value Fund has returned -1.35%, just below its Russell 2000 benchmark which has reported a loss of -1.09%. The firm’s Dividend Value Fund is broadly diversified with over 200 holdings. Currently, the Fund’s leading position is in Expeditors International of Washington (EXPD, Financial) which has returned 11.51% year to date.
