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There's more pain to come for some popular big dividend-paying stocks

Since Election Day, investors have been voting against big dividends.

The Dow Jones Utility Average (^DJU) has gotten slammed since the beginning of November — tumbling 5% — while the S&P 500 (^GSPC) is near all-time highs and has rallied 4%.

Utilities, known for paying steady dividends, trade like bonds. And like bonds, when rates rise, prices fall. The yield on the US 10-year Treasury Note (^TNX) has climbed from 1.82% to 2.4% since Nov. 1.

In early July, the 10-year note traded with a yield of as low as 1.336%. It was then that the Dow Jones Utility Average saw a record high of 723.83—a 30% rally for the index in two years. It has since shaved about 13% from its peak.

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But now is not the time to go bargain-hunting in utilities just yet, warns Andrew Cowen, managing partner at Badge Investment Partners and sub-advisor to the Community Capital Alternative Income Fund (CCMNX).

“In many cases, dividends are growing a little bit in some of these utilities but really not that much,” Cowen said. “And the businesses are, frankly, not really growing.”

“I think you could see quite a bit more correction,” he added. “If interest rates keep going higher, which seems very possible, it could be a long time before they are attractive investment.”

Cowen is also steering clear of one large name in the energy sector, Exxon Mobil (XOM), which trades at nearly 41 times trailing earnings and 20.5 times next 12-months’ earnings, according to data from Thomson Reuters.

“Historically, Exxon, like most integrated oil companies, has been about 10 to about 13 times earnings,” Cowen said. “It’s actually overpaying its dividend relative to its earnings and way overpaying its dividend relative to its free cash flow.”

Exxon Mobil’s dividend yield is currently 3.4%, according to Morningstar, but it is paying out 38% more in dividends than its earnings.

Nonetheless, Cowen sees opportunities in energy but in the infrastructure space with master limited partnerships (MLPs) and is long Macquarie Infrastructure (MIC) and Crestwood Equity Partners (CEQP).

“The MLPs got completely blasted last year with oil and gas trading down,” Cowen notes. “It’s funny to me that Exxon and Chevron (CVX) and the other big integrated oil companies are trading basically at their all-time highs—almost where they were when oil was at $110. Oil now is at around $52… whereas a lot of these MLPs have traded off 30, 40, 50% or more.”