Buy These 5 High-Yielding Stocks To Cushion Your Portfolio
Zacks Investment Research | Apr 24, 2018 08:55AM ET
After an exponential rise throughout 2017, the U.S. stock markets have been witnessing turmoil since February 2018. Markets remain highly unstable with rapid ascent being observed one week, followed by a sharp decline the very next week. Investors remain skeptical about the U.S. mid-term elections and high expectations from first-quarter earnings.
One of the easiest ways for any company to raise its shareholders’ wealth is to hike dividend rate. Investment in high-dividend paying stocks, over a reasonable time period, is likely to bring good returns, especially when the market is plagued with severe volatility. At this stage, investors should choose stocks which promise strong dividend yield and carry a favorable Zacks Rank to capitalize on future growth.
Political Issues Loom Large
With mid-term elections in the United States imminent, several opinion polls have predicted that Democrats are likely to get majority in the House of Representatives even though Republicans are expected to maintain an upper hand in the Senate. However, a divided government doesn’t bode well for investors.
Trump administration is deeply concerned about national security and China’s drive to unseat the United States as the primary developer and supplier of products in the fields of high-tech artificial intelligence, semiconductors, quantum computing and various other digital technology driven sectors.
These concerns compelled the government to adopt and impose protectionist policies. However, Trump’s strategy might not succeed with a majority of Democrats in the House.
Meanwhile, the Senate Judiciary Committee is drafting a bill to protect special counsel Robert Mueller from being fired by President Trump. Mueller is investigating into whether Trump’s campaign team colluded with Russia in the run-up to the 2016 presidential election.
Earnings Expectations Skyrocket
First-quarter earnings results have been exhibiting strong momentum so far. In fact, investors have pinned high hopes on first-quarter 2018 earnings. These massive expectations are often resulting in day-to-day market volatility.
On Apr 15, share price of three major banks JPMorgan Chase & Co. (NYSE:JPM) , Citigroup Inc. (NYSE:C) and Wells Fargo & Co. (NYSE:WFC) shed 2.7%, 1.6% and 3.4%, respectively. These banking behemoths lost significantly despite reporting better-than-expected first quarter results.
The earnings and revenue growth rates along with the proportion of positive earnings surprises are tracking materially above historical periods. With expectations too high, it is possible that actual results may not live up to expectations, which will weigh on the sector’s stock market performance in the coming days. (Read More: Zacks Investment Research
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