The Dividend Cafe - Wednesday - October 7, 2026

Episode Date: October 7, 2026

Brian Szytel reports a modest down day in equities after all-time highs, with oil trending lower (WTI ~88, Brent ~100), a slightly flatter yield curve, and the 10-year around 5.28%. He cites limited economic news beyond FOMC minutes reaffirming a 25 bp hike and expectations for another hike this year, alongside a well-received ~40B 10-year auction. He describes a bifurcated backdrop: higher-for-longer rates pressuring rate-sensitive, long-duration sectors (real estate, BDCs, asset/alternative managers) while credit remains stable with subdued high-yield spreads, and the economy stays strong with full employment, high corporate margins, and inflation easing slowly. He highlights AI-driven productivity expectations as pivotal, advocates measured AI exposure, and says REIT dividends can hold and grow if holdings are selective and supported by rent growth, citing defensible real estate examples and past dividend growth through prior shocks. 00:00 Market Close Snapshot 00:39 Rates Oil and Rotation 01:08 Fed Minutes and Treasury Demand 01:47 Higher for Longer Risks 03:24 Economy Still Strong 03:44 AI Productivity Wildcard 04:34 REITs and Dividend Resilience 05:17 Portfolio Real Estate Examples 06:16 Wrap Up and Q&A Invite Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Good evening and welcome to Dividend Cafe. This is Brian Saitel with you this evening from our New York City Manhattan office here at the Bonson Group. And I happen to pop in to record this just a few minutes before the close. Actually, it's about, to be honest, here, looks like 30 minutes before the close in the market. so I can get to the next portfolio manager meeting. But I've got a lot to say, and I want to walk through things. So we have a down day in equities.

We just closed at all-time highs on NASDAQ and SMPs, a down day when really we're talking about about two-thirds of a percent on the Dow, which is around 300 points. S&P was down about a quarter of a percent. NASDAQ's down about a third, so you can't call that too much of a pullback. Nonetheless, it was some oscillation around interest rates. Oil ended up pulling back a little on the day at WTI close at about 88. and Brent is about 100.

So oil prices have trended lower. Yield curve flattened here a little bit, and I think those things are generally positive. Interest rates were about flat on the day. You have a 10-year still trading at 528. All in all, call it constructive, albeit a little lower in markets. It was a rotation from some of the growthy areas and semis

back into some of the value and defensives. The news, really, in the economic calendar, was pretty limited. There was the release of the FOMC minutes. We obviously know they raised rates by 25 basis points last meeting in a unanimous vote, and not to be intuitively what you would expect is they're citing inflation being not have made enough progress yet. And so not only did the raise rates that time, but they see another rate hike before the end of the year. And we'll see if that's going to be October or December at this point. Other than that, it was pretty quiet in the calendar.

You actually did have about $40 billion or so of 10-year auction, get pretty well received through the Treasury market. So there's still plenty of demand in that front. But all at all, the theme right now is somewhat bifurcated. It's an interesting market dynamic because on one hand, you've got higher for longer rates, putting pressure on risk assets. There's no question that's true. That hurts things like leveraged buyouts when they were done during zero interest. Totally different considerations and expectations around interest rates. Those deals don't pencil anymore.

You also have a lot of private equity sponsors. They're just having a tougher time finding the exit multiples that they need to transact, and they've marked their funds based on X multiple. and they need to sell their positions at that multiple or higher, not lower. They're not going to take a haircut on the marks. So those things are ongoing. And you just have credit markets that really have absorbed things pretty well. High yield spreads right now are about 320 basis points.

If you look at high yield spreads in the energy market, they're all the way down to about 174 basis points. So just keep in mind, energy is very healthy. Obviously, the commodity prices have gone up with Iran and Ukraine. But that aside, they are just much better businesses. and balance sheets than they were, call it 10 years ago and 15 and 16. So those spreads remain subdued. And that is a good sign. But the point is, this is not a credit event of any kind right now. You have rates that are higher and it's purely what is being heard is just rate-sensitive duration sectors of the market, long-duration assets, real estate or BDCs or asset managers

or certainly private credit or alternative asset managers are all down. But a lot of the other sectors are up. And the one thing I'll say is rates staying higher for too long or continuing to go up, it can turn into a credit event. That's just not what we're saying yet. So that's on one side of the ledger. The other side of the ledger is this economy that is doing really quite well. And so you've got expanding nominal GDP into the threes. You've got all-time high corporate margins. You've got full employment. And you have inflation that's sitting higher than we want it to be, but still trending in the right direction. It's just been slower than we would want. So what does all mean the 800 pound gorilla in the room is the AI when does it add to productivity and if and

when and everything around this economy and this expansion is predicated on that penciling out to some degree and there's different players betting on the when and the if and the how that's all fine but it can't be zero if that's going to be the case then we need to take growth expectations down and so most of the meetings that we're doing as we're walking around the city whether it be with alternative managers private equity whether it be with credit shops fixed income all of them are in the same boat with it being very impactful because the adjacent sectors, it touches all asset classes and it touches all sectors. And we'll have to see how that continues to play out. And my take on that is to have exposure, but don't be wildly over exposed.

And we think we're doing a pretty decent job of that in the portfolios that we manage. The question was about real estate holdings in a dividend portfolio. Can they withstand higher rates and can they continue to grow the dividend? The short answer is yes, but you need to be selective on that. Does real estate get more effective by higher rates? Sure. That's a given. But if you can buy the right reits and own them for the right reasons and analyze the positions that you own, then I believe that you absolutely can have your dividend protected and also still grow through a period. Reets are pass-throughs. They just pass through a percentage of earnings in the form of income. So rates going up, it's intuitive to ask the question, but you just got to say if rates are

up, but then also rents are up, then there's an offset to that. So keep the that in mind. That's assuming that there's leverage in the business to begin with. But look, we own the largest mall operator in the country. People are shopping because consumers are consuming. That's what Americans are the best at. They've got jobs. They're fully employed. And they have the highest net worth they've ever had in their outspending money. We've got cold storage and the key supply chain issue and the food supply of the country. And you can say that people change eating habits when there's a recession. In other words, maybe they eat more breads and things versus meat products and such, that can happen. There can be a change of consumption

within food, but food itself is pretty inelastic, I think, since if you don't have it, you end up perishing. So I just think there's ways to be defensible around it. And if you look at both COVID and the GFC and 2022, when you had shocks either to credit markets or to rates or to the just equity market, we were able to continue to grow dividends during those periods of time and on a blended basis, meaning portfolio basis. And I don't suspect that change anytime soon. Good question, but that's the way I'd answer it for today. I'm going to hit the road down Fifth Avenue to the next meeting here at Cullen. And I wish you well. Thank you for listening. Reach out with questions. Got a few in the hopper, but always can use more and I like hearing from you anyway. Talk to you soon.

Have a good evening. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member Finra and SIPC, and with High Tower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy ourselves securities. No investor process is free risk. There is no guarantee that the investment process or investment opportunities referenced

to Rian will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced TIRAN may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analysis, prices, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice. The Bonsor Group in Hightower shall not in any way be liable for claims and make no express or implied representations or warranties as to the

accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced here in. The data and information are provided as of the date reference. Such data and information are subject to change without notice. This document was created for informational purposes only, that opinions expressed, are solely those of the Bonson Group and do not represent those of High Tower Advisors' LLC or any of its affiliates. High Tower advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.