What is the appropriate risk in a balanced portfolio in the current environment?
Balancing the risk of rising interest rates for bond funds and potential drop in stock prices can be delicate. However, ensuring that you have an appropriate mix of both depending on your goals and time horizon can fortify your position. An advisor managed ETF portfolio would be a great choice.
Best wishes for your retirement and all kudos to you for paying attention to your investments.
You bring up a good point, in that although dividend yields on stocks are higher than interest rates on fixed income, they come with equity risk as reflected in the beta of 0.91 relative to the S&P that you mention. Additionally, because investors have rushed into dividend paying stocks in a low yielding environment, some of these stocks are priced for perfection and maybe volatile if rates rise and/or stocks fall.
If you have dividend paying stocks in your portfolio it must be considered as equity not fixed income and should be weighted accordingly. If your overall portfolio is constructed to match your risk profile then the individual volatility of the dividend stocks should not matter over the long term.
While stocks have run up a lot there are concerns that they may correct, nobody can tell for sure when that is likely to happen. Tactical allocations can help at the margins. A better way to construct portfolio is to match it to your risk profile and objectives. If you are planning on withdrawing money from this portfolio (And you will have required minimum distributions at 70.5 in any case) you may want to divide the portfolio into short term (Very safe low duration fixed income), medium term (Higher yielding fixed income) and long term (Equities) and rebalance. Your dividend stocks would be part of the third bucket. If your portfolio is all in stocks then yes, you may want to reduce risk.