4 High Dividend Yielding Consumer Staples Stocks To Buy Now
Zacks Investment Research | Sep 19, 2016 10:09PM ET
Consumer confidence – a key determinant of the economy’s health – surged during the month of August, indicating that the economy is on the recovery trail after a dismal show during the first half of the year. Still lower gasoline prices and a strong labor market have helped increase household wealth, which eventually boosted consumer spending.
Though there is enough evidence to suggest that the economy may rebound in the third quarter, we still remain concerned about the timing of the interest rate hike by the U.S. Federal Reserve, as well as Brexit aftershocks and other global growth issues. Moreover, the August manufacturing and services index readings were disappointing along with soft jobs data, which unnerved investors.
Amid this widespread uncertainty, investors must be wondering where to park their money. Therefore, target safe bets for now rather than going for stocks with high earnings growth potential (only).
The Winning Strategy: Investment in Dividend Stocks
In an erratic market, it is normal for investors to choose stocks that offer steady returns against their investment. Naturally, the spotlight falls on dividend stocks that offer stable income and are generally less volatile in nature. In unfavorable markets, these stocks shield investors’ portfolio like none other.
Historically, dividend-paying stocks have outperformed with respect to their long-term returns. Moreover, in a low interest rate environment, dividend paying stocks offer substantial yields on a regular basis.
Why Consumer Staple Stocks?
Surging consumer confidence and indications of a stronger economy in the second half of the year make the consumer staples sector attractive. Investing in consumer staples stocks is safer because of their defensive nature. In fact, consumer staple stocks have the potential to counter headwinds from Brexit aftershocks, the Federal Reserve’s still pending decision over the rate hike, impact of currency fluctuations and other global growth issues.
This is why it may be a good idea to pick consumer-related stocks at this point. However, selecting winning stocks may prove to be difficult.
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