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The S&P 500 may have registered a modest gain on Sep 13 but its rally has mostly paused this month. Lest we forget, the broader index posted its worst weekly performance on Sep 10 since February as most investors remained concerned about a volatile autumn. No doubt, stocks have stayed near record highs after climbing for much of the summer months. However, since September, stocks have started to retreat.
Anyhow, the month of September isn’t favorable for the stock market. Since 1928, the S&P 500, on average, has given a negative return of 0.99% in September, citing a Barron’s article. But it’s just not the S&P 500, the Dow has also witnessed a loss of 0.8% in September dating back to 1950, according to Stock Trader’s Almanac, as mentioned in an Investopedia article.
Nonetheless, a series of headwinds are now threatening to derail the stock market’s upward journey in the near future. After an upbeat second-quarter earnings season and speedy economic recovery, several analysts now believe that economic growth has already peaked. After all, hiring slowed down last month as the spread of the more contagious Delta variant of coronavirus hampered economic recovery. In fact, the Fed’s Beige Book mentioned the slowing down of economic activity from July through August and possibilities of further deceleration in the near term. This certainly doesn’t augur well for Wall Street.
The spread of the Delta variant compelled Americans to put an hold on travel plans, with a measure of their sentiments recently touching the lowest level in almost a decade. By the way, inflation is already weighing on consumers’ confidence and has raised prospects of an economic slowdown. Such developments have now compelled many analysts to lower their forecast for the S&P 500 this year. For instance, Bank of America expects the S&P 500 to decline roughly 5% by the end of the year, citing a Wall Street Journal article. The article further stated that as per Dow Jones Market Data, the upcoming autumn months tend to be the most volatile for the stock market.
Having said that, President Biden’s proposal to raise corporate taxes along with the Fed’s decision to taper its asset purchases may not help drive the S&P 500 to new highs this year. A possible hike in corporate taxes could easily impact a companies’ earnings per share. Similarly, the Fed’s move to wind down its asset purchasing program could turn out to be a dampener for stocks. After all, it’s the central bank’s easy monetary policy that has been driving the stock market amid the pandemic.
But despite concerns looming over the stock market’s upward journey in the near term, investors shouldn’t shun equities completely. Instead, one should invest in stocks perceived to be safe and capable of providing better returns in the near future. Thus, these stocks have low beta and are dividend payers. This means they provide risk-adjusted returns and are fundamentally sound enough to steer through market volatility. We have, hence, highlighted four such stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Redwood Trust, Inc. (RWT - Free Report) is a self-advised and self-managed real estate investment trust. The company has a beta of 0.97 and a Zacks Rank #1. It has a dividend yield of 5.9%, while its five-year average dividend yield is 8.1%. The company’s expected earnings growth rate for the current year is 3,125%. You can seethe complete list of today’s Zacks #1 Rank stocks here.
The CocaCola Company (KO - Free Report) is a beverage company. The company has a beta of 0.62 and a Zacks Rank #2. It has a dividend yield of 3%, while its five-year average dividend yield is 3.3%. The company’s expected earnings growth rate for the current year is 15.4%.
Old Republic International Corporation (ORI - Free Report) is organized as an insurance holding company whose subsidiaries actively market, underwrite, and provide risk management services for a wide variety of coverages, mostly in the general and title insurance fields. The company has a beta of 0.84 and a Zacks Rank #1. It has a dividend yield of 3.5%, while its five-year average dividend yield is almost 4%. The company’s expected earnings growth rate for the current year is 16.1%.
BCB Bancorp, Inc. (BCBP - Free Report) operates as the holding company for BCB Community Bank, a state chartered commercial bank that provides banking products and services to businesses and individuals in the United States. The company has a beta of 0.62 and a Zacks Rank #2. It has a dividend yield of 4.4%, while its five-year average dividend yield is 4.5%. The company’s expected earnings growth rate for the current year is 52.6%.
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4 of the Best Stocks to Counter a Tricky Autumn
The S&P 500 may have registered a modest gain on Sep 13 but its rally has mostly paused this month. Lest we forget, the broader index posted its worst weekly performance on Sep 10 since February as most investors remained concerned about a volatile autumn. No doubt, stocks have stayed near record highs after climbing for much of the summer months. However, since September, stocks have started to retreat.
Anyhow, the month of September isn’t favorable for the stock market. Since 1928, the S&P 500, on average, has given a negative return of 0.99% in September, citing a Barron’s article. But it’s just not the S&P 500, the Dow has also witnessed a loss of 0.8% in September dating back to 1950, according to Stock Trader’s Almanac, as mentioned in an Investopedia article.
Nonetheless, a series of headwinds are now threatening to derail the stock market’s upward journey in the near future. After an upbeat second-quarter earnings season and speedy economic recovery, several analysts now believe that economic growth has already peaked. After all, hiring slowed down last month as the spread of the more contagious Delta variant of coronavirus hampered economic recovery. In fact, the Fed’s Beige Book mentioned the slowing down of economic activity from July through August and possibilities of further deceleration in the near term. This certainly doesn’t augur well for Wall Street.
The spread of the Delta variant compelled Americans to put an hold on travel plans, with a measure of their sentiments recently touching the lowest level in almost a decade. By the way, inflation is already weighing on consumers’ confidence and has raised prospects of an economic slowdown. Such developments have now compelled many analysts to lower their forecast for the S&P 500 this year. For instance, Bank of America expects the S&P 500 to decline roughly 5% by the end of the year, citing a Wall Street Journal article. The article further stated that as per Dow Jones Market Data, the upcoming autumn months tend to be the most volatile for the stock market.
Having said that, President Biden’s proposal to raise corporate taxes along with the Fed’s decision to taper its asset purchases may not help drive the S&P 500 to new highs this year. A possible hike in corporate taxes could easily impact a companies’ earnings per share. Similarly, the Fed’s move to wind down its asset purchasing program could turn out to be a dampener for stocks. After all, it’s the central bank’s easy monetary policy that has been driving the stock market amid the pandemic.
But despite concerns looming over the stock market’s upward journey in the near term, investors shouldn’t shun equities completely. Instead, one should invest in stocks perceived to be safe and capable of providing better returns in the near future. Thus, these stocks have low beta and are dividend payers. This means they provide risk-adjusted returns and are fundamentally sound enough to steer through market volatility. We have, hence, highlighted four such stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Redwood Trust, Inc. (RWT - Free Report) is a self-advised and self-managed real estate investment trust. The company has a beta of 0.97 and a Zacks Rank #1. It has a dividend yield of 5.9%, while its five-year average dividend yield is 8.1%. The company’s expected earnings growth rate for the current year is 3,125%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The CocaCola Company (KO - Free Report) is a beverage company. The company has a beta of 0.62 and a Zacks Rank #2. It has a dividend yield of 3%, while its five-year average dividend yield is 3.3%. The company’s expected earnings growth rate for the current year is 15.4%.
Old Republic International Corporation (ORI - Free Report) is organized as an insurance holding company whose subsidiaries actively market, underwrite, and provide risk management services for a wide variety of coverages, mostly in the general and title insurance fields. The company has a beta of 0.84 and a Zacks Rank #1. It has a dividend yield of 3.5%, while its five-year average dividend yield is almost 4%. The company’s expected earnings growth rate for the current year is 16.1%.
BCB Bancorp, Inc. (BCBP - Free Report) operates as the holding company for BCB Community Bank, a state chartered commercial bank that provides banking products and services to businesses and individuals in the United States. The company has a beta of 0.62 and a Zacks Rank #2. It has a dividend yield of 4.4%, while its five-year average dividend yield is 4.5%. The company’s expected earnings growth rate for the current year is 52.6%.