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Per the latest report from Johns Hopkins University, the number of cases of COVID-19 infections rose above 10,000 in the United States for the first time on Mar 19. Furthermore, the pandemic has claimed more than 10,000 lives globally, affecting approximately 2,44,500 people across the world.
Meanwhile, the coronavirus has also dealt a huge blow to markets globally. Valuations have gone for a toss across every asset class and sector. Also, volatility-induced selling has hit the bourses. Such developments have had an adverse effect on some of the best stock market performers, forcing the major market indices into correction.
Furthermore, lockdowns and social distancing have also disrupted supply chains of almost every business. In fact, the Federal Reserve’s monetary easing did little to improve investors’ sentiments. However, investors shouldn't panic and sell their position in stocks. Instead, they must focus on companies that are immune to the current market gyrations and pay steady.
As a matter of fact, long-term investors treat such sell-offs as golden opportunities to buy stocks at great discounts.
Why Dividend Stocks?
Investors are once again in search of dividend stocks amid the current uncertainty. This is because dividend-paying securities are major sources of consistent income when returns from the equity market are at risk.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.
Additionally, these stocks have superior fundamentals that make dividend growth a quality and make them a promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that the company is likely to continue the trend.
4 Hot Choices
Dividend stocks will prove to be a safe harbor amid the coronavirus crisis. Dividend paying stocks are likely to provide a cushion from the adverse economic effects of social distancing too. In this context, we have selected four stocks that are expected to gain from these factors. These five stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Macy's, Inc. (M) is a retailer which operates stores, websites and mobile applications.
The company is based out of Cincinnati, OH and sports a Zacks Rank #1. The Zacks Consensus Estimate for the current year has improved 7.8% over the past 60 days. The company provides a dividend yield of 24.4%.
AbbVie Inc. (ABBV) is a developer and manufacturer of pharmaceutical products.
The company is based out of North Chicago, IL and carries a Zacks Rank #2. The Zacks Consensus Estimate for the current year has improved 2% over the past 60 days. The company provides a dividend yield of 6.7%.
Pfizer Inc. (PFE) , based out of New York, NY, holds a Zacks Rank #2. The Zacks Consensus Estimate for the current year has improved 4.9% over the past 60 days. The company provides a dividend yield of 4.7%.
New Residential Investment Corp. (NRZ) is a real estate investment trust, focusing on investing in and managing residential mortgage related assets.
The company is based out of New York, NY and carries a Zacks Rank #1. The Zacks Consensus Estimate for the current year has improved 3.9% over the past 60 days. The company provides a dividend yield of 34.9%.
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