Chad -- Nobody here is going to debate WHAT YOU THINK and WHAT IS RIGHT FOR YOU.... I've said this time and again - and will repeat. You - the individual - must sleep at night with the decisions you made for your investments.... regardless of what that is.
Having said that... you left out the fact that IF and WHEN interest rates rise - your bonds are going to be just as hammered (capital)... and that interest rates tend to rise slowly and are WELL TELEGRAPHED by the fed. There is plenty of time to bail from whatever strategy you've employed.
Now -- if and when interest rates start to rise - which will also telegraph that things (economically) are getting better - which generally leads to a RISE in the stock market... so, much of the "loss" of the dividend % paid is made up with the corresponding increase in capital gains. You must take the two together - capital increase and dividend payouts in order to calculate your return. The market will (should) rise in a interest rate rising environment "at first"... because it signals strength in the economy - then inflation will set in - and yields will fall - and so to, will stocks.
Back in the mid 70's and early 80's -- you didn't need to own stocks because a bank CD would pay you 12%! But those are market cycles and 99% of the folks can't "time" them. And we're talking about steady eddy investing here not market timing. Even though I understand what you're talking about.
BONDS - Of which I have a HUGE position in - are TERRIBLE investments unless you're already retired or are very near retirement and you just can't bear to have any capital loss (you'd hold to maturity). They have no capital growth but are bought for SAFETY and for the tax free (albeit below "market" rates) dividends. Unless you're a trader - and that isn't what INVESTING 102 is about.
Personally -- I wish we had RAGING INFLATION.... I owe nothing - and would be happy as a pig in poo to be getting 10% interest in a money market fund/CD.... but the folks old enough to remember those days will tell you that they weren't good times at all.
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