The recent sell-off in the market on Tuesday has caught the attention of investors, raising concerns about the possibility of a larger downtrend. After a strong first quarter where the benchmark S&P 500 reached record highs, the sudden slide of more than 1% in all major indexes has left traders wondering about the future direction of the market. The uncertainty surrounding the economy and the Federal Reserve’s decisions on interest rates have added to the volatility in the market, making it a challenging time for investors.
In times of market uncertainty, investors often turn to defensive strategies to protect their portfolios and generate income. One approach is to look for steady income-paying stocks that can provide stability during turbulent market conditions. These types of stocks can act as a buffer against market volatility while still offering investors a source of income. By focusing on dividend-paying stocks with strong fundamentals and potential for growth, investors can position themselves more defensively in the current market environment.
One way to find defensive stocks is to use screening tools to identify companies that meet specific criteria. CNBC Pro recently screened for defensive stocks that offer dividend income by looking for equities with the following qualities:
– Trading up on Tuesday despite the broader market retreat
– Beta of less than 0.9, indicating lower volatility than the overall market
– Dividend yield above 1%
– Average price target from Wall Street analysts implying upside of 5% or more
Several utility stocks were identified as part of the screening process, with the sector showing resilience in the face of market volatility. One of the stocks that stood out was Sempra, which analysts believe has significant upside potential despite its recent decline. With a favorable outlook and buy ratings from the majority of analysts, Sempra is seen as a strong contender for defensive investors looking for income-generating opportunities.
Verizon is another stock that has performed well in 2024, outperforming the S&P 500 and offering a 6% dividend yield. Analysts have mixed opinions on the telecom stock, but the average price target suggests further upside potential. By focusing on companies like Verizon that have a track record of growth and income generation, investors can navigate market uncertainties more effectively.
Tuesday’s market sell-off has highlighted the importance of defensive strategies for investors in the current market environment. By focusing on dividend-paying stocks with strong fundamentals and growth potential, investors can protect their portfolios from volatility while still generating income. Screening tools and research from analysts can help investors identify defensive stocks that have the potential to outperform in turbulent market conditions. As the market continues to exhibit volatility, being proactive and strategic in investment decisions is essential for long-term success.