Welcome to Extreme Investor Network, where we provide you with unique insights and valuable information to help you make smart investing decisions. Today, we’re diving into the world of dividend stocks and why they may be a favorable option in the current economic environment.
According to Bank of America, their U.S. Regime Indicator is showing a positive sign for dividend stocks. The indicator moved into a recovery phase in February, with the largest increase since July 2021 in March. Equity and quant strategist Savita Subramanian emphasized the importance of owning dividend stocks with above-market yields in this environment.
Subramanian highlighted that High Div Yield has led 88% of the time during prior recoveries. She also pointed out that this factor remains inexpensive and neglected, making it a potential beneficiary of income investors’ flows if the Fed begins to cut rates.
When selecting dividend stocks, Subramanian recommends looking for companies with above-market yields that are secure, not stretched. She specifically looks at quintile two of the Russell 1000 by trailing dividend yield to identify promising candidates, as this group includes the second-highest tranche of dividend yielders in the index.
Some names on Bank of America’s list for April include AES and Sempra in the utility sector. AES yields 4% and Sempra yields 3.4%, both known for their predictable dividends. Despite lagging the overall market this year, there have been recent gains in the Utilities Select Sector SPDR Fund (XLU).
Energy names like APA and HF Sinclair are also highlighted by Bank of America. APA has a 3.1% dividend yield, while HF Sinclair yields 3.5%. APA recently announced a deal to acquire Callon Petroleum in a $4.5 billion all-stock transaction, further bolstering its presence in the U.S.’s Permian Basin.
Financial names like Citigroup were also mentioned by Bank of America, with Citi posting a first-quarter revenue beat due to better-than-expected results in its investment banking and trading divisions. Shares of Citi are up 22% so far this year.
At Extreme Investor Network, we believe that dividend stocks present a promising opportunity for investors in the current economic landscape. By focusing on companies with secure above-market yields, you can position yourself for potential growth and income generation. Stay tuned for more unique insights and valuable information on investing strategies and market trends.
