For Immediate Release
Chicago, IL – July 10, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BlackRock, Inc. (BLK - Free Report) , Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) , MEDIFAST INC (MED - Free Report) , Air Products and Chemicals, Inc. (APD - Free Report) and Juniper Networks, Inc. (JNPR - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Is the 60/40 Rule Obsolete Now? 5 Dividend Stocks to Buy
As one enters the retirement period, a smart allocation of assets is needed to enjoy a regular stream of income. Earlier, a rule of thumb was followed for retirement corpus, which said that the stock part of one’s portfolio should equal 100 minus the retiree’s age. For example, if an investor retires at 60, 40% of his total savings would go to stocks and the rest to bonds.
But strategists from Bank of America and J.P. Morgan now see the end of success in the 60-40 standard portfolio. J.P. Morgan believes that a traditional 60/40 portfolio will deliver annual returns of 3.5% over the next decade, compared with 10% over the past few decades, per an article published on MarketWatch.
The key reason is meager interest rates from government bonds in a rock-bottom interest rate scenario. As of Jul 7, 2020, the benchmark U.S. treasury yield was 0.65% while the real benchmark yield was negative 0.78%. Real yields have been negative from all the maturities’ periods including 5-year, 7-year, 10-year, 20-year and 30-year.
What Do Wall Street Strategists Believe?
“The relationship between asset classes has changed so much that many investors now buy equities not for future growth but for current income, and buy bonds to participate in price rallies,” said Bank of America strategists.
“In the zero-yield world, which we think will be with us for years, bonds offer neither much return nor protection against equity falls,” said Jan Loeys and Shiny Kundu, strategists at JP Morgan, in a recent note, as quoted on MarketWatch.
“With yields so low, bonds can no longer do all the things they’ve been doing for investors during this secular declining interest rate environment over the last forty years,” said David Jilek, chief investment strategist at Gateway Investment Advisers, noted MarketWatch.
Time to Shift to Dividend-Heavy Stocks?
One solution to deal with record-low interest rates could be investing in dividend-oriented stocks. However, the coronavirus outbreak made the matter tough with many companies cutting or halting dividends. One has to choose companies with a history of dividend payments and providing decent yields too. Having a look at the companies’ financial strength is also important in the current situation.
Stocks to Pick
Below we highlight a few stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy), a dividend yield of greater than equal to 2%, five-year historical dividend growth of greater than 5%, debt-equity ratio of less than equal to one and a cash ratio of greater than one.
The Zacks Rank #1 company offers products that span the risk spectrum, including active, enhanced and index strategies through a variety of structures that include separate accounts, mutual funds, iShares (ETFs) and other pooled investment vehicles.
Dividend Yield: 2.60%
Five-year historical dividend growth: 12.50%
Debt-Equity Ratio: 0.63X
Cash Ratio: 1.50X
Taiwan Semiconductor Manufacturing Company Ltd.
The Zacks Rank #2 company is the world's largest dedicated integrated circuit foundry.
Dividend Yield: 2.15%
Five-year historical dividend growth: 18.20%
Debt-Equity Ratio: 0.04X
Cash Ratio: 1.23X
The Zacks Rank #1 company is a leading manufacturer and distributor of clinically proven healthy living products and programs.
Dividend Yield: 3.02%
Five-year historical dividend growth: 45.90%
Debt-Equity Ratio: 0.00X
Cash Ratio: 1.31X
Air Products and Chemicals, Inc.
The Zacks Rank #2 company makes industrial gases as well as a variety of polymer and performance chemicals.
Dividend Yield: 2.15%
Five-year historical dividend growth: 11.04%
Debt-Equity Ratio: 0.28X
Cash Ratio: 1.37X
Juniper Networks, Inc.
The Zacks Rank #2 company is a provider of networking solutions and communication devices.
Dividend Yield: 3.47%
Five-year historical dividend growth: 21.65%
Debt-Equity Ratio: 0.39X
Cash Ratio: 1.51X
Zacks Top 10 Stocks for 2020
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.