Several Bank of America Securities strategists say that despite the seemingly endless market plunge, there still remains some stocks offering a ray of hope to bruised and battered investors.
“Even for those investing for the next year rather than the next decade, stocks still appear extremely attractive vs. bonds, especially high-quality companies with safe dividends,” they recently wrote, according to Barron’s.
The strategists “screened for high-quality stocks with safe dividends that are also rated Buy by BofA equity analysts. Financials and utilities sector companies also had to have a payout ratio—a firm’s dividends as a percentage of net income—below their sector mean and lower earnings-per-share volatility than the S&P 500 average,” Barron’s said.
BofA came up with 20 stocks with seemingly bulletproof dividend cuts:
S&P 500 Utilities and Financials
- Fifth Third Bancorp FITB
- Morgan Stanley MS
- Chubb Limited CB
- Progressive PGR
- Allstate ALL
- Goldman Sachs GS
- Evergy EVRG
- CMS Energy CMS
- Alliant Energy LNT
- Ameren AEE
- Atmos Energy ATO
S&P 500 excluding financials and utilities
- Ross Stores ROST
- TJX TJX
- Baxter International
- Cerner CERN 1
- Humana HUM
- Huntington Ingalls Industries HII
- Cintas CTAS
- Nvidia NVDA
- Microsoft MSFT
However, if you happen to be hesitant about such a strategy, other investment gurus offer a most simple approach.
Jim Cramer said savvy investors should take the recent stock-market plunge to start buying stocks in consumer goods “we can’t live without.”
The “Mad Money” host said on CNBC that defensive stocks can outperform the broader market during an economic downturn because there is constant demand for their products.
“Check out your medicine cabinet, check your refrigerator, look at your pantry,” Cramer said, noting that nearly any product that can be found in the supermarket would qualify.
He cited examples as Conagra Brands (CAG), J M Smucker (SJM) and Clorox (CLX).
“We should buy quality recession-proof stocks because that’s what works when the economy’s on hiatus,” Cramer said.
“There are many industries that are truly on the ropes here and I expect them to remain on the ropes for a long time, unless they fall flat on the canvas,” he said.
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