Don’t be the one who misses the boat on DIVIDEND RELIGION. Investors are finding out now what Your Survival Guy has known for a long time, there is something special about dividend paying stocks. The Wall Street Journal’s Hardika Singh and Michael Wursthorn report:
Boring companies have been hot during the stock market’s winter swoon.
An early-year tumble in major U.S. stock indexes has some investors searching for safety by dumping shares of high-growth technology stocks for stodgier businesses that pay shareholders cash, including banks, oil companies and telecoms.
Through Feb. 4, the S&P 500 High Yield Dividend Index—made up of the S&P 500’s top 80 dividend-paying companies—was up 2.1% including dividends, compared with a negative total return of 5.5% for the broad benchmark through Friday. The average dividend-paying stock in the S&P 500 rose by 6.6 percentage points more than nonpayers in January, the biggest margin favoring payers in 17 years, according to S&P Dow Jones Indices.
Rising inflation and the prospect of the first interest-rate increases by the Federal Reserve in more than three years has raised questions about the economy’s durability. Income-generating stocks are seen as a safe harbor from those worries, analysts said, while once-highflying stocks, including some tech behemoths’ shares, have been laid low as investors try to select tomorrow’s winners and losers.
Sandy Villere, a portfolio manager at wealth management firm Villere & Co., which manages $2.4 billion in equity and fixed-income strategies, said he has bought clients more shares of Chevron Corp. , as well as consumer products company Newell Brands Inc. and PepsiCo Inc. , this year. Newell, which has a nearly 4.2% dividend yield, is up 0.6% so far this year, while PepsiCo has a 2.5% payout and has fallen 1.1%. Chevron has a 3.8% dividend yield; its shares are up 18%.
“In this environment, a good place to hide would be some of these dividend-oriented companies that are going to grind through this market turbulence,” said Mr. Villere.
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Originally posted on Your Survival Guy.