5 Top Dividend Aristocrats To Buy In 2019

 | Jan 02, 2019 07:25AM ET

Wall Street may have seen a Santa Claus rally by the end of last year, but that wasn’t enough to salvage a disappointing year. Investors’ appetite for riskier assets like stocks took a beating in 2018, with the major bourses seeing the worst year since 2008.

Few market pundits could predict such neck-breaking market gyrations in 2018 after an unusually calm 2017. From the U.S.-China trade dispute to slow economic and earnings growth, everything only added to the chaos. The fears that gripped markets in 2018 may continue to reflect in volatile price swings this year. Thus, in order to safeguard your portfolio, investing in dividend aristocrats seems prudent. After all, these stocks provide higher total returns with lower volatility.

But, before we select the stocks let us look at the risks that have sent shivers down investors’ spines of late —

Political Shakiness

Though market bulls hope for progress in U.S.-China trade negotiations, tensions loom large. President Trump continues to threaten a tariff increase on billions of dollars worth of Chinese commodities if China fails to address U.S. demands on economic and political issues. Lest we forget, such tariffs will be paid by American companies and they will invariably pass the cost onto consumers, who account for two-third of U.S.’ GDP.

By the way, Trump’s warnings to lessen the power of the Fed Chair also raise concern. Investors may not like a hawkish Fed, but they certainly want peace and consistency, and threatening the Fed Chair is not inducing any calm.

Amid all these, an U.S. government shutdown is set to stretch this year due to a deadlock between the White House and lawmakers over the President’s intention of securing financing for a wall on the border with Mexico.

At the same time, dysfunction in the United Kingdom has thrown investors for a loop. No one knows what will be the impact of Brexit. In fact, if it rolls out on Mar 29 without a deal, it will most certainly hurt the global economy.

Global Economic Slowdown in the Cards

Thanks to the tax cuts and a solid labor market, the U.S. economy expanded at an annual rate of 4.2% and 3.4% in the second and third quarter of last year. But, the Fed officials now expect growth to moderate over the next couple of years. Fed officials expect the pace of the economic expansion to slow down to 2.3% this year.