David Katz, chief investment officer at Matrix Asset Advisors in White Plains, N.Y., recently put together a list of dividend payers that he thinks make sense in such a volatile market rattled on a daily basis by coronavirus fears.
Katz recently pointed out to Barron’s that higher-yielding stocks can be a trap because “you are either not going to get the capital appreciation or the dividend is not safe.”
“If you are very risk-averse, you can likely buy a basket of stocks with few or no issues that are not overly exposed to the coronavirus, or the economy, and whose downside is very limited,” he says.
They include pharmaceutical firm AbbVie (ticker: ABBV), which yields 5.2%; health-care conglomerate CVS Health (CVS), 3.1%; food company Kellogg (K), 3.6%; and telecom and media firm AT&T (T), 5.6%.
The other three companies on Katz’s list are broadcaster and entertainment company Viacom (VIAC), Verizon Communications (VZ) and Wells Fargo (WFC). Their respective yields were recently at 4.4%, 4.3%, and 5.2%.
Katz says that in this market, capital losses are an important short-term consideration, especially if an investor’s portfolio includes more economically sensitive businesses like energy.
Meanwhile, U.S. stock markets tumbled on Friday as fears of economic damage intensified with the global tally of coronavirus cases crossing 100,000, sending investors scurrying to the perceived safety of bonds.
"The sentiment is that we don't have (the virus) under control and we don't know or understand how much worse things can get," said Keith Buchanan, senior portfolio manager at Globalt.
For his part, St. Louis Federal Reserve President James Bullard said the U.S. economy could face a slowdown caused by the coronavirus but it's still possible the worst outcome could be avoided,
The Fed official said a public health response would be the "optimal" way to address the risks stemming from the virus. The spread of the virus could lead to a slowdown but it could be short-lived if the outbreak is contained.
"Markets seem to be pricing in the very worst outcome here and I'm not sure that's warranted," Bullard said on a panel at an event organized by the Shadow Open Market Committee in New York.
This report uses material from the AP, Bloomberg and Reuters.
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