BMO suggests dividend growth stocks to deal with market volatility. Morgan Stanley, Intel and Discover also are on the list.
With the stock market sputtering so far this year, you may be looking for a margin of safety. Dividend stocks can offer some stability in times of market volatility.
BMO has assembled a list of dividend growth stocks (stocks with growing dividends) that it likes. The roster includes Tyson Foods (TSN) – Get Tyson Foods, Inc. Class A Report, Target (TGT) – Get Target Corporation Report and Morgan Stanley (MS) – Get Morgan Stanley Report, CNBC reports.
“Given current market dynamics, we do believe price swings and bouts of volatility will become more frequent in the coming months, and will require further discipline and perspective from investors,” Brian Belski, BMO’s chief investment strategist at BMO, wrote, CNBC reported.
The S&P 500 has fallen 8% so far this year, and the CBOE Volatility Index has soared 68%.
“We are highlighting one of our most favored investment strategies, dividend growth, as one potential way to navigate the current and anticipated condition,” Belski said. “Companies that are able to continue paying or even increase their dividends during challenging times are the epitome of high quality and stability.”
Other stocks on the list include Skyworks Solutions (SWKS) – Get Skyworks Solutions, Inc. Report, Intel (INTC) – Get Intel Corporation Report, HP (HPQ) – Get HP Inc. Report, Quest Diagnostics (DGX) – Get Quest Diagnostics Incorporated Report, Discover Financial Services (DFS) – Get Discover Financial Services Report, Allstate (ALL) – Get Allstate Corporation Report and Advance Auto Parts (AAP) – Get Advance Auto Parts, Inc. Report.
Despite its near-term focus on volatility, BMO is bullish on stocks for the year as a whole. Its year-end target for the S&P 500 is 5,300, among the highest predictions on Wall Street. That would represent a 21% gain from Friday’s close of 4,398.
“We … have not seen any material changes in the fundamental backdrop of U.S. equities to suggest there is significant trouble on the horizon,” Belski said.
