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Time to Find Some Dividend Religion

February 8, 2022 By E.J. Smith

By Marko Aliaksandr @ Shutterstock.com

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:

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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. 

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E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com

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