Buy-rated dividend stocks for volatility and high rates - BMO
DKosig
The current market environment calls for a less-traditional multi-factor model for choosing dividend stocks.
"While volatility has been relatively muted this year, we continue to believe there is a high likelihood that increased bouts of volatility will reappear in the US equity markets in the coming months given the amount of headline risk currently out there," strategist Brian Belski wrote in a note. We "analyzed all monthly periods since 1990 and found that the Dividend MFR (multi-factor rank) fared significantly better than the overall market during periods of S&P 500 (SP500) (NYSEARCA:SPY) (IVV) (VOO) losses."
"Along with the ability to defend against losses, our analysis also shows that this strategy can also outperform during periods of market strength," Belski said. "This is an important point to make, as many investors are under the assumption that any dividend strategy is at a significant disadvantage when the market moves higher, which is not necessarily true based on our work."
Looking at high Treasury yields, "when examining monthly periods going back to 1990 where the US 10-year CMT yield (US10Y) was above its three-year moving average, our Dividend MFR model posted an average one-year total return of 15.5%, about 2% higher than the overall market, and with superior risk-adjusted stats," he added. "Therefore, while the yields are likely to remain above the very low levels investors have become used to over the past decade, this certainly does not represent a poor backdrop for all dividend strategies."
He highlighted 15 stocks that are rated Outperform and are in the dividend screen:

AbbVie (ABBV)
Broadcom (AVGO)
ConocoPhillips (COP)
Devon Energy (DVN)
EOG Resources (EOG)
Eli Lilly (LLY)
Mastercard (MA)
The Mosaic (MOS)
Microsoft (MSFT)
NextEra Energy (NEE)
Pioneer Natural Resources (PXD)
Starbucks (SBUX)
TJX (TJX)
Texas Instruments (TXN)
Visa (V)


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