This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Investors Gobble Up Dividend Stocks During Market Turbulence
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Investors Gobble Up Dividend Stocks During Market Turbulence
Markets

Investors Gobble Up Dividend Stocks During Market Turbulence

Editorial Board Published February 7, 2022
Share
Investors Gobble Up Dividend Stocks During Market Turbulence
SHARE

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.

The S&P 500 and the Nasdaq Composite suffered through their worst January in more than a decade as big tech stocks slid. The indexes are down 5.9% and 10%, respectively, this year, while the Dow Jones Industrial Average is down 3.4%. Meanwhile, shares of energy giant Exxon Mobil Corp. and regional bank People’s United Financial Inc. are up double-digit percentages. Both have dividend yields of at least 3.6%, almost three times higher than the S&P 500’s.

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. 

Investors poured $7.5 billion into funds that buy dividend-paying stocks in January, the most on record, according to data from Refinitiv Lipper, with more than $2 billion of inflows during the week ended Feb. 2. 

Steve Chiavarone, head of multiasset solutions at Federated Hermes, said several dividend payers have pricing power, are inexpensive and offer hefty payouts. His firm’s Strategic Value Dividend Fund has risen 4.6% so far this year. 

“We’re due for a rotation, and that rotation is happening right now,” said Eric Diton, president and managing director at The Wealth Alliance, who manages $880 million in assets, 14% of which are focused on dividend-oriented strategies. 

SHARE YOUR THOUGHTS

What is your outlook on the market for 2022? Join the conversation below.

The attractiveness of dividend stocks rests, in part, on bond yields. Generally, when bond yields are lower than stocks’ dividend yields, investors see no alternative to equities. Yields on the benchmark 10-year U.S. Treasury note traded at 1.92% Monday, greater than the 1.3% dividend yield on the S&P 500 as of Friday. However, when adjusted for expected future inflation, real bond yields remain around negative 0.5%, making stocks a more attractive option for many investors. 

Investors could lose their taste for dividend-paying companies if they cut payouts amid deteriorating economic conditions. With 33 increases in January, slightly more than a year earlier, according to S&P, companies have generally raised payouts following solid growth last year when there were 372 increases or dividend initiations and five cuts or suspensions. That compares with 298 increases or initiations and 69 cuts or suspensions in a volatile 2020.

One traditional favorite of dividend-minded investors cut its payout earlier this month: AT&T Inc. The telecom company said it would slash its dividend nearly in half following the spinout of its WarnerMedia division. Its shares have fallen 6.2% since.

“Investors need to address the contingency of a market that could fall,” said Phillip Toews, chief executive and co-portfolio manager at Toews Asset Management. “One way to insulate yourself from losses is to have a dividend stock focus.”

Concern about economic conditions has propelled Mr. Toews to be particularly defensive. His firm has rotated about 90% of its assets into cash from mostly equities and bonds. The remaining 10% has been swapped with low-volatility shares that pay dividends, including those of Verizon Communications Inc. and Philip Morris International Inc.

For now, investors say they are focused on the biggest dividend-paying stocks, where payouts continue to exceed the income generated by bonds. Cigarette makers Altria Group Inc. and Philip Morris sport dividend yields of 7% and 4.7%, respectively, and their stocks are both up at least 6.3% so far this year. Exxon Mobil is up 35% so far this year, thanks in part to rising oil prices and the fact that it pays a 4.2% dividend yield.

“The story of 2022 is the revenge of the boring,” said Mr. Chiavarone, of Federated Hermes. 

Write to Hardika Singh at hardika.singh@wsj.com and Michael Wursthorn at michael.wursthorn@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Democrats’ mandate hypocrisy angers voters, signals end of COVID-19 rules Democrats’ mandate hypocrisy angers voters, signals end of COVID-19 rules
Next Article Joe Rogan Gets 0 Million Offer From Rumble Video Website Joe Rogan Gets $100 Million Offer From Rumble Video Website

Editor's Pick

TLI Ranked Highest-Rated 3PL on Google Reviews

TLI Ranked Highest-Rated 3PL on Google Reviews

EXTON, PA — Translogistics, Inc. (TLI), a trailblazer in the 3PL and managed logistics space since its founding in 1994,…

By Editorial Board 12 Min Read
Steelmaker Nucor experiences cybersecurity incident, shuts down some manufacturing
Steelmaker Nucor experiences cybersecurity incident, shuts down some manufacturing

Coalition for a Affluent America chief economist Jeff Ferry discusses Treasury Secretary…

2 Min Read
Justin Baldoni Shares Emotional Message Amid Blake Vigorous Lawsuit
Justin Baldoni Shares Emotional Message Amid Blake Vigorous Lawsuit

Studying Time: 3 minutes Justin Baldoni has damaged his silence. In a…

5 Min Read

Oponion

Lady useless after deadly crash in Alamo

Lady useless after deadly crash in Alamo

California Freeway Patrol officers responded to a name on Wednesday…

October 10, 2024

Kate Middleton, Prince William Publish Pic For Princess Charlotte’s Birthday; Followers Marvel at Father-Daughter Resemblance

Studying Time: 2 minutes It’s an…

May 2, 2025

Peter Eckersley Helped Encrypt Internet Traffic to Foil Snoops

Peter Eckersley, who earned a Ph.D.…

September 9, 2022

Joe Biden snaps at Peter Doocy: ‘Stupid son of a bitch’

President Biden lashed out Monday at…

January 24, 2022

Nike Can Handle Vietnam, but Watch China

Vietnam’s factory closures are stealing the…

September 24, 2021

You Might Also Like

Regeneron Prescription drugs to purchase bankrupt 23andMe in 6M deal
Markets

Regeneron Prescription drugs to purchase bankrupt 23andMe in $256M deal

Rep. James Comer, R-Ky., on 23andMe knowledge privateness considerations, his invitation for sanctuary governors to testify earlier than lawmakers and…

4 Min Read
STEPHEN MOORE: Why Moody’s credibility needs to be questioned after downgrade of US federal bonds
Markets

STEPHEN MOORE: Why Moody’s credibility needs to be questioned after downgrade of US federal bonds

SlateStone Wealth's Kenny Polcari and Key Advisors Wealth Administration CEO Eddie Ghabour analyze the state of the financial system and…

5 Min Read
Drink firm that sells Guinness and Johnnie Walker sees 0M revenue hit from tariffs
Markets

Drink firm that sells Guinness and Johnnie Walker sees $150M revenue hit from tariffs

WhistlePig Whiskey founder Raj Bhakta discusses President Donald Trump's tariffs and the success of his firm. The world's largest spirits…

3 Min Read
Boeing, GE and Trump’s Center East journey to recollect
Markets

Boeing, GE and Trump’s Center East journey to recollect

Boeing CEO Kelly Ortberg and Larry Culp, CEO of GE Aerospace, thanked President Donald Trump for serving to dealer a…

5 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?