4 Big Dividend Stocks To Avoid In A Rising Interest Rate Environment

A recent CNBC "Trading Nation" segment examined which high dividend yielding stocks investors should avoid if the Federal Reserve hikes its interest rates next week.

The four stocks are:

• Frontier Communications Corp (NASDAQ: FTR) - 16.9 percent dividend yield.
• Iron Mountain Incorporated (Delaware) REIT (NYSE: IRM) - 6.3 percent dividend yield.
• Welltower Inc (NYSE: HCN) - 5.2 percent dividend yield.
• Ventas, Inc. (NYSE: VTR) - 5.1 percent dividend yield.

CNBC noted that big dividend paying stocks tend to move alongside bond prices, which is inversely correlated to yields. In other words, as bond yield rise, the prospect of dividend paying stocks are less enticing.

The report added that the four stocks mentioned also contain above-market price-to-earnings valuations and a minimum dividend yield of 5 percent.

Boris Schlossberg of BK Asset Management explained during the CNBC segment that interest rates are most certainly heading higher and once they do dividend yielding stocks will be "squeezed" - especially if the companies won't be able to grow their dividends moving forward.

"The fact that they have high valuations and high dividend yields puts them in a danger zone for me because they are going to have to put up or shut up going forward if the yield curve expands higher," Schlossberg concluded on the subject.

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