With stock market volatility on the rise and likely to persist, investors should think more defensively. That means looking for great companies to buy on big down days for the market. It can also mean taking a more income-oriented approach.
That can include companies with low to moderate dividend yields with a history of increasing that payout over time, or companies with a high current yield. Either could help boost investor returns in today’s jittery markets.
Plus, dividend stocks should perform well should interest rates move lower, as dividend yields will look more attractive compared to bond yields.
In the income space, telecom giant AT&T (T) looks attractive here, even after a massive 61% rally over the past year. The company continues to grow its income and revenues, and has been working to scale down its debt load.
The real kicker is AT&T’s dividend, which is a hefty 4.2% at today’s prices. That’s more than double the S&P 500’s dividend yield of less than 2%.
Action to take: Investors may like shares here, as the company is firing on all cylinders right now and could see more growth ahead, in addition to its defensive qualities given the non-cyclical nature of the telecom market.
For traders, the June $28 calls, last trading for about $0.85, could see mid-to-high double-digit returns if shares continue to gradually trend higher in the weeks ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.