There’s a good deal of fear in the market.
Investors are panicking. Markets are plunging. Stocks are plummeting. All thanks to inflation, and an aggressive interest rate campaign from the Federal Reserve. Even central banks around the world are raising interest rates to get runaway inflation under control.
As a result, the Dow Jones is down 18% to date. The NASDAQ is down 32%. The S&P 500 sank 23%. Meanwhile, the Volatility Index (VIX) spiked from 16.34 to 34.
Some of the best ways to trade skyrocketing volatility is with related ETFs and ETNs, such as:
- ProShares Ultra VIX Short-Term Futures ETF (UVXY) — The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.
- iPath S&P 500 VIX Short-Term Futures (VXX) — The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.
- ProShares VIX Short-Term Futures ETF (VIXY) — ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.
Those trades move higher as the VIX moves higher.
Another way to protect your portfolio from fear is with high-yielding dividend stocks.
In fact, as noted by Investopedia, “Stocks with a high dividend yield can be a good investment. In many cases, stocks that offer a high yield are often a safer bet than growth stocks.”
That being said, here are some high-yielding stocks to consider, as markets plunge.
Target Corp. (TGT)
Target took a bad hit.
All after earnings missed the mark, and after it lowered its full-year forecast on operating income margins to 6%, instead of its forecast 8%.
According to CEO Brian Cornell, “We were less profitable than we expected to be, or intend to be over time … it’s clear that many of these cost pressures will persist in the near term. Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time.”
Unfortunately, the company has been hit by inflation, weak results with discretionary goods, and supply chain pressures.
But give it time. Over the long-term, it could pay off well.
According to Raymond James analyst Bobby Griffin, “We continue to be buyers on the pullback, and see Target as a long-term winner in today’s retail landscape and believe the company can sustain its recent market share gains across multiple product categories due to its customer loyalty (i.e., F1Q traffic gains), strong brand partnerships (AAPL, ULTA, LEVI etc.), and growing private label penetration,” as noted by Investing.com.
The analyst also has a strong buy rating with a price target of $205.
Two, while 2022 profits may be weaker than expected, there’s still a good deal of value here. Inflation, supply chain issues, and higher freight costs for example should be temporary. Three, Target is a dividend king that has raised its dividend over the last 50 years. TGT currently carries a dividend yield of 3.1%.
Lowe’s Corp. (LOW)
Home improvement company, Lowe’s hasn’t had a great year.
However, don’t write it off just yet. After falling from a high of about $260 to $172, the dividend-paying is on sale with a dividend yield of 2.44%.
“Home Depot might be the larger DIY chain, but that’s in part because investors are paying a significant premium for shares,” says Kiplinger.com. “And this discount comes despite the fact that Lowe’s has delivered better returns across most timeframes, including a 159% total return (price plus dividends) over the past five years versus 124% for HD.”
Recent earnings were strong, too. In its first quarter, the company saw net earnings of $2.3 billion, or EPS of $3.51, which beat expectations for $3.22. Lowe’s also reiterated its 2022 outlook for 2022 revenue of $97 billion to $99 billion, and earnings of $13.10 to $13.60 a share.
The company also just raied its dividend 31% to $1.05. It’s payable August 3 to shareholders of record, as of July 20.
Procter & Gamble (PG)
At the moment, Procter & Gamble carries a dividend yield of 2.76%.
While it’s chart may be ugly, don’t write this one off either. With PG, most of its brands are still seeing strong demand, including healthcare, grooming, home care, and care. Nno matter how steep of a downturn, consumers still need soap, detergent, toothpaste, toilet paper, food, etc. All of which can help provide a steadier and far more predictable cash flow for the company.
Also, in the third quarter, the company posted $19.4 billion in net sales, which beat estimates for $18.7 billion. That happened because PG’s portfolio is stocked with well-known, demanded brands that many consumers must have. And because of that necessity, the company was able to raise prices by 5%, helping it navigate. PG also saw adjusted non-GAAP EPS of $1.33, which was also above expectations for $1.28.
Global X Super Dividend ETF (SDIV)
Another great way to invest in downturns is with high-yielding ETFs.
Look at the Global X Super Dividend ETF (SDIV), for example. With an expense ratio of 0.58%, the SDIV ETF has a dividend yield of just over 10%. The SDIV ETF is also less than $10 a share. It also has access to 100 of the highest dividend paying stocks around the world. Some of its top holdings include Logan Group Co., Midea Real Estate, CMC Markets PLC, Imperial Brands, Pacific Textiles Holdings, and Lumen Technologies to name a few.
More information on this ETF can be found here: https://www.globalxetfs.com/funds/sdiv/
“SDIV is a dividend-seeking fund in the global equity market. Selection starts from a universe of companies listed on a regulated stock exchange, including emerging markets. The 100 highest-yielding stocks are chosen, subject to liquidity and stability screens. The index is reviewed quarterly based on dividend cuts or outlook on a company’s dividend policy. Removed companies will be replaced by the next highest-yielding stocks from the universe that is excluded from the index,”as noted by ETF.com.
With a dividend yield of 5.96%, HBI is another hot, oversold stock to consider.
“Hanes’ brands have held up during many economic cycles and ownership changes. They have, in some cases, even survived years of mismanagement and neglect. Hanes’ brands have leading market share in multiple countries and multiple categories,” says Morningstar.
HBI has also seen a good deal of insider buying.
CEO Stephen B. Bratspies paid $501,600 for 34,292 shares.
“We are creating a brand new HanesBrands, focused on growth and consumer centricity,” Bratspies said, as quoted by Barron’s. “We have made rapid progress on our Full Potential plan, including growing our global Champion brand and re-igniting innerwear growth, in spite of the extremely difficult operating environment. I am more optimistic than ever in our long-term growth potential as we invest in our iconic brands, our people and our supply chain.”
Earnings have been solid, too.
HanesBrands exceeded guidance for sales, operating profit, operating margin and earnings per share despite an increasingly challenging global operating environment. The better-than-expected performance was driven by continued strong consumer demand for its brands and increased SG&A efficiency as the Company benefits from its Full Potential initiatives.
Net sales from continuing operations of $1.58 billion increased $68 million, or 5%, over prior year. Excluding the $30 million unfavorable impact from foreign exchange rates, net sales increased 7%.