[ad_1]
According to BMO Capital Markets, the oversold corner of the market is expected to rebound, providing investors with income. Dividend stocks are under pressure in today’s high interest rate environment as investors focus on high-yield bonds. However, the investment bank said there were some stocks within the group where “indiscriminate selling” had gone too far. Brian Belsky, chief investment strategist at BMO, said in a note last week that these so-called “fair price yield” (YARP) stocks are not only undervalued, but also have higher dividend growth than the market. . “We believe these stocks were unfairly penalized in response to his perception of interest rate trends,” Belsky wrote. He noted that stock yield levels are also supported by earnings and cash flow. Additionally, he noted that these YARP stocks have risen more than 80% annually, outperforming the S&P 500 by an average of 5.7% from trough to peak in relative performance. “Therefore, if historical patterns are any guide, this could be a good time for investors to consider adding exposure to these types of stocks within their portfolios,” Belsky added. . Below are some of the S&P 500 YARP stocks that he thinks will outperform. All of these companies have lower trailing 12-month price-to-earnings ratios than the index and higher dividend yields than the index. Additionally, his dividend per share growth rate over the next two years has outpaced the market, and he is expected to continue to see solid returns. Among the power companies on the list is American Electric Power. The dividend yield is 4.3%, up about 1% year-to-date. The company is scheduled to report its quarterly results before the bell next Tuesday. Earlier this month, American Electric Power entered into an agreement with Icahn Capital to appoint two new directors to its board of directors, including Hunter C. Gailey, a senior managing director at Icahn Capital. . His Exelon, another utility, has a 4% dividend yield, which is also up less than 1% so far this year. Shares rose Wednesday after the company beat earnings and sales before the bell. Exelon also increased its quarterly dividend to 38 cents per share, a 5.6% increase from the 2023 fourth quarter dividend of 36 cents per share. Biopharmaceutical company Gilead Sciences also made the list. Last week, the company announced a $4.3 billion deal to acquire drug developer CymaBay Therapeutics to gain access to experimental liver disease treatments. Gilead announced earlier this month that fourth-quarter adjusted earnings per share were lower than expected, but revenue was in line with expectations. The current stock yield is 4.2%, down 10% year-to-date. Gilead also announced a 2.7% increase in its cash dividend, from 75 cents per share to 77 cents per share, to be paid on March 28th. Finally, investment banking giant Morgan Stanley is down nearly 9% so far this year, with its dividend at 4%. yield. The company’s fourth-quarter earnings beat expectations, but CEO Ted Pick warned that geopolitical conflicts and the U.S. economy could weigh on the bank this year. did. —CNBC’s Michael Bloom contributed reporting.
[ad_2]
Source link
