Top 5 High-Yielding Stock Market Gainers YTD With More Upside

 | Aug 24, 2021 05:33AM ET

Wall Street has performed impressively year to date after finishing an astonishing bull run in 2020, exiting the coronavirus-led short bear market. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 15.5%, 19.3% and 15.9%, respectively.

Despite this strong performance, a section of economists and financial researchers are worried that the U.S. economic recovery may have reached its peak and may slow down going forward.

A series of weak economic data, the rapid spread of the Delta string of coronavirus, a gradual fading out of fiscal stimulus and the possibility of an earlier-than-expected tapering of the Fed’s quantitative easing program may pull down the U.S. economy in the second half of 2021.

Nevertheless, U.S. economic fundamentals remain robust and the market’s northward journey is expected to continue for the rest of 2021 despite intermittent fluctuations. Several positives are there back up Wall Street’s bull run ahead.

In order to capture the market’s upside, one should invest in stocks with a favorable Zacks Rank that have strong potential for the rest of this year. On the other hand, to protect one’s portfolio from an unexpected downturn, high-yielding stocks with a favorable Zacks Rank that are regular dividend payers will be very lucrative. Combining these two criteria, we can construct a set of stocks that will enrich and protect one’s portfolio in terms of the market’s movement either way.

Possible Downsides/h3

The resurgence of the highly-infectious Delta strain of coronavirus raised questions about the pace of economic recovery. In the United States, new cases are jumping significantly. The preliminary data of the Consumer Sentiment Index for August and IHS Markit’s services and manufacturing indexes for August dropped significantly.

The weekly unemployment benefit, as part of the fiscal stimulus, will terminate in September. This may reduce consumer spending. Retail sales plummeted 1.1% in July compared with the consensus estimate of a decline of 0.3%.

Moreover, there is growing speculation in the financial space that the Fed will start tapering its $120 billion per month bond-buy program as early as this year to curb mounting inflationary pressure. Any reduction in monetary stimulus may be detrimental to U.S. economic recovery.

Possible Upsides/h3

U.S. businesses of all sizes are expanding their scale of operations and hiring more despite soaring wages and salaries to cater to robust demand. The personal savings of Americans are around an astonishing $2 trillion. The sky-high savings are allowing people to indulge in their demands that were pent up during lockdowns and in turn compelling businesses to expand their scale of operations.

On Aug 10, the U.S. Senate passed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.
Infrastructure projects such as roads, bridges, passenger rails, airports, drinking water and waste-water systems, high-speed Internet, and climate-related infrastructure will benefit. The bill is now headed to the House of Representatives for discussions and vote.

On Aug 23, the U.S. Food and Drug Administration (FDA) granted the first approval to the COVID-19 vaccine developed by Pfizer Inc. (NYSE:PFE) the complete list of today’s Zacks #1 Rank stocks here .

The chart below shows the price performance of our five picks year to date.

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