- Companies that pay dividends typically have financial strength, which can balance a portfolio.
- They can also be attractive because they tend to outperform in an inflationary environment.
- Below are nine dividend-paying stocks compiled by TipRanks.
The economy may be starting to cool down.
October’s consumer price index was 7.7%, compared to 8.2% in September, signaling that inflation is declining.
As the year draws to a close, the risk of a steeper downtrend for US equities may also have passed. A Goldman Sachs note released on Nov. 21 expects 2023 to be a year of less pain but no gains for U.S. stocks. This is because a lack of earnings per share (EPS) growth will lead to a zero rating in the S&P 500.
Year-to-date, the S&P 500 was down about 16% and traded at about 4,024, as of Wednesday, November 23. The investment bank’s baseline forecast assumes a soft landing for the US economy with the index landing at 4,000 by the end. of next year. However, in a recession hard-landing scenario, which the note says remains a clear risk, the index could fall to 3,150. Overall, Goldman advises investors to remain cautious and avoid long-term, unprofitable stocks.
Others have an even grim outlook. George Noble, a hedge fund manager who once ran the top performing US mutual fund, says we could see a two-stage bear market that could take the index to 2,700 before any recovery.
The current economic climate remains particularly bad for growth stocks that may need to raise capital in an illiquid market. Typically, during risk-free periods, investors move away from these riskier stocks and flock to lower-risk securities such as bonds and value stocks.
Companies that pay dividends to their shareholders are an option to emerge from bear markets. They usually have stronger financial balance sheets, which can bring stability to a portfolio and create a buffer to protect against economic downturns. Dividend paying stocks tend to outperform in an inflationary environment. In addition, these stocks can be less volatile because investors hold them in exchange for what is often a quarterly payout.
For those familiar with stock picking, it’s important to note that companies pay higher dividends could mean it is a riskier investment. The high yields can be unsustainable in the long run and cause a company to go into debt or reduce payouts.
Below is a list of nine high-dividend stocks Tip ranks, a financial technology company that uses artificial intelligence to analyze financial data. Each slide contains the dividend yield of the stock.