A strange thing happened on Friday.
Something that just a few months ago would have sent world share markets into a tailspin.
But not any more.
US interest rates are headed up. After a bullish jobs report, you can virtually count on it.
US markets — and therefore global markets — have long been worried about the timing of the first interest rate rise in seven years.
Worry no more. US interest rates are likely headed higher in December.
In an early Christmas present for investors, US markets headed higher on Friday.
That's despite share markets HATING higher interest rates. They slow economies. They make cash look a better bet. They make equities look more expensive.
Friday's rise in the Dow is a bullish sign.
That it rose after the jobs report is a very bullish sign.
The US economy is chugging along very nicely.
Unemployment remains low. Corporate earnings are growing. Inflation is modest.
Even if the Fed does raise interest rates next month, it will be from the current 0% to 0.25%… hardly anything to worry about.
Finally, common sense is prevailing. Share market "temper tantrums" about higher US interest rates are a thing of the past. US interest rates are going up, but will still remain at record lows, likely for years to come.
By comparison, equities are still attractive. They are likely to remain attractive for years to come, given the 10-year US government bond yield stands at just 2.3%.
What's all this mean for Australian investors?
Firstly, volatility is likely to wane. Much of the uncertainty surrounding the timing of higher US interest rates just got taken off the table. If volatility alone is holding you in term deposits and out of equities, worry no more.
Secondly, in the wake of the strong US jobs report and the subsequent increased likelihood of a December hike in US interest rates, the US dollar soared, pushing the Aussie dollar down to around US70 cents.
A lower Aussie dollar is music to the ears of Glenn Stevens. He has long wanted a lower dollar to help boost the economy, his record low 2% cash rate unable to do all the heavy lifting on its own. Plus, he's been concerned even lower Aussie interest rates would further fuel the Sydney and Melbourne house price bubble.
Worry no more, Glenn Stevens.
Thanks to the strengthening US economy, a lower Aussie is here.
Thanks to the big four banks increasing their mortgage rates, much of the air has been removed from Sydney house prices, with the weekend auction clearance rate falling below 60%, a three-year low.
All this happening without Glenn Stevens having to lift a finger on interest rates. He can keep his powder dry for another day.
Which is just as well, given the Reserve Bank of Australia (RBA) has just trimmed its growth forecast and slashed the inflation outlook for the Australian economy.
The end of the mining boom, low commodity prices, a slowing Chinese economy, low inflation and that pesky house price bubble are holding the economy back.
If you haven't already, get used to low growth. Get used to interest rates remaining at around these low levels for years to come. Maybe even lower…
And here's another thing to get used to…
The end of an era for Aussie blue chip shares.
The portfolios of many older Australians are dominated by a few blue chip companies. Tell me if any of these names look familiar?
Commonwealth Bank of Australia (ASX: CBA)
Westpac Banking Corp (ASX: WBC)
Australia and New Zealand Banking Group (ASX: ANZ)
National Australia Bank Ltd. (ASX: NAB)
BHP Billiton Limited (ASX: BHP)
Woolworths Limited (ASX: WOW)
Telstra Corporation Ltd (ASX: TLS)
The big four banks. In the past eight months, their share prices are all down 20%, a bear market.
And according to UBS, things aren't going to get a whole lot better. The investment bank is predicting zero earnings per share growth for the big four banks in 2016 AND 2017. Zero earnings growth means zero dividend growth too.
An investment today in the big four banks is not my idea of fun.
Same can be said for BHP Billiton. Its shares are down 35% from their 2015 high, and down 50% from their 2011 high. So much for the mining boom.
According to the AFR, commodities have slumped to their lowest since 1999. BHP's Brazil mine disaster is a tragedy, with many people killed.
From an investing perspective, it could be the incident that ultimately finishes BHP CEO Andrew Mackenzie's progressive dividend policy. With shares in The Big Australian now trading at $22, and on a 7.7% fully franked dividend yield, the market is effectively saying the dividend yield is unsustainable.
Woolworths. The fresh food people. In a total and utter pickle. No CEO. Masters a flop. Analysts believe the board may cut its dividend by 30% to preserve cash and strengthen its credit rating. The shares are going nowhere but down.
Telstra. The best of a bad bunch. Earnings are edging slowly higher. The 5.8% fully franked dividend yield is attractive, with dividends forecast to edge higher in the years ahead. But don't expect fireworks with the Telstra share price. For a slow growing company, a P/E of 15 is about right.
According to Philip Baker in the AFR, given ongoing low interest rates, "the hunt for yield goes on." It's just that now you're going to have to look outside the usual blue chip suspects for tomorrow's winners.
And that's where our resident dividend expert Andrew Page comes into the equation. You may be familiar with Andrew from his regular appearances on Sky Business News.
Andrew is absolutely passionate about dividends. He's even more passionate about finding "under the radar" companies that can grow their dividends and their share price. In this tough market, it's no easy task.
Andrew's "bread and butter" dividend shares are companies you simply won't find on the front pages of the mainstream press.
Companies like Australian Pharmaceutical Industries (ASX: API), up a whopping 135% since Andrew first recommended them to members of his Motley Fool Dividend Investor share tipping service.
Or Amalgamated Holdings Limited (ASX: AHD), up almost 50% since Andrew first recommended them. A fully franked dividend and serious share price appreciation is about as good as it gets.
TOMORROW, Andrew will reveal his latest top dividend share tip, exclusively to members of his Motley Fool Dividend Investor service.
The company operates in a sector with some secular tailwinds, which should propel its growth for years to come. It's the cheapest stock in its sector, trading on a forecast dividend yield of close to 5%.
If you're on the hunt for yield, the prospect of capital growth floats your boat, and you're looking to diversify away from the usual dividend share suspects, this ASX 100 stock could just be your ticket… as could be a subscription to Andrew's Motley Fool Dividend Investor service. At just $99 for a full 12 month membership, it could be today's best bet.
