The role of dividends could grow in 2026

First the Federal Reserve. While we do anticipate further rate cuts we do not know when those necessarily begin. December's expected rate cut is a 50 50 coin flip and we do not see the prospects for a more dovish Fed until after May in 2026. Also I would suggest AI. The Mag seven super eight now accompany 38 percent of the S and P 500s weight. Pretty substantial. We sit here and watch and are waiting to see productivity benefits come through the pipeline. There will winners and there will be losers. But that size exposure to the marketplace certainly will keep volatility to the forefront of all of our minds. And then finally a more recent issue to continue to watch is unemployment. We have seen a softening most recently. Does that continue and how does that tie back into the Feds future plans for rate cuts. A rate cut situation is certainly supportive of the broad economy but it does apply additional pressure to those individuals who are living off of their own cash flows. What I specifically mean are those individuals in the distribution phase of their lifecycle. The Baby Boomers are a good example. When you are facing a rate cut environment that really creates a scarcity of cash flow for this subset of the marketplace. But there are solutions out there and one that I would propose is that dividend investing provides an exceptional opportunity. That portion of your total return is not subjected to the vagaries of the stock market creating some natural downside protection. If you want to elongate your spending policy you need three things. A high going coupon something substantial so that you do not have to sell assets to raise cash. Secondarily, dividend growth to protect against inflation. And then finally, downside protection. You never want to sell during period of market distress. That kills principal.