U.S. stock markets are shrouded in uncertainty with the major indices stumbling yet again yesterday after hitting alarming lows last Friday. The S&P 500 index dropped 1.8%, losing 36.87 points while the Dow Jones industrial average fell 1.5%, losing 260.51 points. The tech-heavy Nasdaq Composite suffered an even greater fall of 2.4%, slipping113.54 points.

Brexit &Other Commotion: What’s in Store for U.S. Investors?

Of course, the primary malefactor that recently rocked the stock market from Tokyo to Toronto, was Britain’s confirmation that it will exit the European Union – a shocker that created a Black Friday on Jun 24. Analysts fear this undesirable Brexit affair to unleash a sell-off worth $300 billion in the U.S., as this nation is the largest single investor in Britain. This in turn might drag the U.S. stock market once again into a prolonged period of volatility from which it recovered only a few months ago.

In the wake of this phenomenal Brexit event, the odds have taken a complete rebound with respect to the Fed’s expected rate hike in next month’s meeting. As per Bloomberg data, before the Brexit vote took place, the majority of analysts expected the Fed to raise interest rate at least once in 2016, even if not in July. But for now, Britain seems to have sealed the fate of Fed’s policy tightening. Most investors fear that Brexit might have triggered too much macroeconomic turmoil, which will force the Fed to stay put once again.

Amid this widespread uncertainty, investors must be wondering where to park their money or whether to invest in the stock market at all. But market upheavals are part of the game and should not discourage investment decisions.Instead, investors should now target safe bets rather than going for stocks with high earnings growth potential (only); as this might turn into a nightmare.

Dividend Stocks Offer Safety in Volatility

In an erratic market, it is natural for investors to choose stocks that offer steady returns against their investment. Naturally, the spotlight falls on dividend stocks that offer stable income and are generally less volatile in nature. In unfavorable markets, these stocks shield investors’ portfolio like none other.

Historically, dividend-paying stocks have outperformed with respect to their long-term returns. Moreover, in a low interest rate environment, dividend paying stocks offer substantial yields on a regular basis.

Why Medical Stocks are Preferred Picks Now

The Q2 earnings season is around the corner and only seven out of the 16 Zacks sectors are expected to report positive earnings growth. Notably, Medical is one of them. Inherently, this sector has delivered a stable performance and remains less sensitive to economic cycles.

In addition, the majority of the S&P500 sectors with substantial revenue exposure in the U.K. are expected to perform poorly on the Brexit decision. Medicalhas a high chance of escaping this onslaughttoo. Being one of the prime S&P 500 sectors, Medical stands out as one of the few safe havens for investors. Currently, Medical is the third sector in the S&P 500 cohort in terms of market cap, and has revenue exposure of only 2.6% in the U.K.; much less than the other primary sectors (as per Factsheet Data).

Stocks to Consider

It is quite evident from the above discussion that in the prevailing volatility, a winning combination will be Medical stocks paying high dividends.

To add even more impetus to this strategy we shall also consider Zacks Rank as a criterion for effective stock selection. This is because stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) indicate positive estimate revisions by brokers in recent times.

Here are five Medical stocks with a dividend yield of more than 2.1% and a solid Zacks Rank #1 or #2.

Bristol-Myers Squibb Company (BMY Quick QuoteBMY - Free Report) : This New-York based biopharmaceutical company manufactures medicines that fight deadly diseases like cancer, cardiovascular disease, hepatitis B and hepatitis C, HIV/AIDS and rheumatoid arthritis.

• Zacks Rank #1
• Dividend Yield: 2.15%

Digirad Corporation : This Georgia-based diagnostics solutions provider offers a wide range of mobile and on-site imaging solutions for health care systems and physicians.

• Zacks Rank #2
•  Dividend Yield: 3.85%

Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) : This NewJersey-based healthcare provider offers products ranging from medical devices to nutritional products. It offerings include pharmaceutical products, baby care and skin care to name a few.

• Zacks Rank #2
• Dividend Yield: 2.77%

Kindred Healthcare Inc. : This Kentucky-based healthcare services company is the largest diversified provider of post-acute care services in the U.S.

• Zacks Rank #2
• Dividend Yield: 4.25%

Pfizer Inc. (PFE Quick QuotePFE - Free Report) : Based in New York, Pfizer is one of the world’s premier biopharmaceutical companies offering a wide variety of products and medicines that support wellness and prevention, as well as treatment and cure for diseases across a broad range of therapeutic areas. 

• Zacks Rank #1
• Dividend Yield: 3.53%

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