It's time again for the end-of-the-year stock market performance review. More importantly, it time to make predictions for 2019.
After experiencing one of the least-volatile year in 2017, the U.S. stock market took investors for a wild ride in 2018. In a turbulent year for the S&P 500 – which tracks the biggest U.S.-listed companies – the index veered between record highs and steep dives. As the ‘tough’ year comes to a close, the market is on pace for its worst December performance since 1931, with its record bull run appearing to end amid the specter of steep 2018 losses.
With just a trading day to go, let us look back at Wall Street’s 2018 performance in more depth, plus what to expect in 2019.
2018: A Tumultuous Year for the S&P 500
In the United States, the market got 2018 off to a phenomenal start as investors cheered lower tax bills and economic barometers showing solid growth trends. The S&P 500 gained almost 6% in the first month of 2018 itself. Despite some bumps along the way, (mainly fears about inflation and the escalating U.S.-China trade war), the index soared to an all-time high closing of 2,930.75 on Thursday, Sep 20 - the 19th record close this year. The benchmark was buoyed by a strong domestic economy, robust job market and encouraging corporate earnings reports.
Sadly, the market was unable to stay in the milestone territory and trouble started to brew, with S&P 500 experiencing a brutal sell-off. The dramatic equity rout over the past three months wiped out gains for the year, pushing the market into the red for 2018. In fact, the index is now down more than 15% since its September highs – just short of a bear market. Despite last week’s upbeat rally, the S&P 500 benchmark has lost nearly 7% of its value so far this year.
Myriad woes, including weaker earnings growth, stalemate on the trade front with China, Fed rate hike, partial government shutdown and slowing global economy are blamed for the heavy autumn selling. Plunging crude oil prices, which recently hit 17-month lows, added to already existing concerns about the pace of global economic demand growth.
With investors becoming increasingly nervous amid all the moving variables, the market is set for its worst yearly decline since 2008.
Will 2019 Be Another Roller-Coaster Ride?
For 2019, analysts anticipate it is going to be more of the same.
Factors like lingering investor uncertainty over U.S.-China trade relations, rising interest rates and moderating corporate earnings growth are expected to slow down the economy in the coming quarters. The budget standoff between President Donald Trump and Congress, faltering health of the global economy and political turmoil in Europe are weighing on the market too.
But it’s not all doom and gloom according to economists. We still have unemployment at multidecade lows, while inflation is in check. Wage growth is holding firm and holiday spending was the strongest in years.
Based on these conflicting economic data and events, more wild market swings appear imminent in 2019.
Dividend Investing to the Rescue
As evident from the market story, stocks can take a sudden turn for the good (or bad), making stock picking a risky game. Every good stock also has its bad day, which further adds to the risk. With uncertainty ruling the markets, it is not surprising that dividend investing has emerged as one of the most popular investing themes.
Dividend stocks are always the investors’ preferred choice as they provide steady income and cushion against market risks. These stocks – displaying solid financial structure and healthy underlying fundamentals – are generally less volatile in nature and hence, are dependable when it comes to long-term investment planning. Moreover, they are proven outperformers over the long term and a safe bet to create wealth while offering sizable yields on a regular basis.
How to Pick the Best Stocks?
Although the benefits of dividend investing cannot be stressed enough, one should keep in mind that not every company can keep up with its dividend paying momentum. Hence, a cautious strategy needs to be followed in order to select the best dividend stocks with potential for steady returns.
To guide investors to the right picks, we highlight five stocks that carry a Zacks Rank of #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Finally, the stocks, which we shall cherry-pick, offer current dividend yield of more than 4% - well above the S&P 500 index’s average yield of around 2%.
5 Stocks to Invest In
Qualcomm Incorporated (QCOM - Free Report) : Qualcomm is a leading designer, manufacturer and marketer of digital wireless telecommunications products and services based on the CDMA technology. The San Diego, CA-based stock currently carries a Zacks Rank #1. Qualcomm is paying out a quarterly dividend of 62 cents per share at the moment, with a dividend yield of 4.4%.
Duke Energy Corporation (DUK - Free Report) : Duke Energy is one of the largest utilities in the U.S., serving more than 9 million customers through its electric and natural gas distribution units. The Charlotte, NC-based stock currently carries a Zacks Rank #2. Duke Energy is paying out a quarterly dividend of 92.75 cents per share at the moment, with a dividend yield of 4.3%.
General Motors Company (GM - Free Report) : General Motors is a leading automotive company engaged in designing, building and selling cars, trucks, crossovers and automobile parts worldwide. The Detroit, MI-based stock currently carries a Zacks Rank #2. General Motors is paying out a quarterly dividend of 38 cents per share at the moment, with a dividend yield of 4.5%.
MetLife, Inc. (MET - Free Report) : MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management. The New York-based stock currently carries a Zacks Rank #2. MetLife is paying out a quarterly dividend of 42 cents per share at the moment, with a dividend yield of 4.1%.
Campbell Soup Company (CPB - Free Report) : Campbell Soup, together with its subsidiaries, is a worldwide manufacturer and marketer of high-quality, branded convenience food products. The Camden, NJ-based stock currently carries a Zacks Rank #2. Campbell Soup is paying out a quarterly dividend of 35 cents per share at the moment, with a dividend yield of 4.2%.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>