Remember TINA? She’s the one everyone was talking about for the past few years, when it came to buying stocks. ‘There is no alternative,’ they said – pointing out that the near-zero interest rate policy has pushed bond yields down to nothing, and that the housing crisis of 2008 had left investors wary of the real estate market – and stocks were the highest returning game in town.
Not anymore. The Federal Reserve has just cracked the whip on rate hikes, implementing a 0.75% increase to the benchmark rate. The immediate result is an end to cheap credit; the 30-year fixed rate mortgage hit 6.22% this week, double the year-ago rate. The Fed has also signaled that it will be winding down its bond purchase program, another move that will act to choke off the flood of cheap money which fueled TINA’s stock market boom.
Stepping back to take a look at the big picture, UBS’s chief investment officer Mark Haefele writes, “To mitigate large potential swings in the VIX, investors can focus on more defensive parts of the market and could outperform in the event of recession. We particularly like quality income, dividend-paying stocks…”
Using the TipRanks database, we were able to pinpoint two such picks, ‘Strong Buy’ dividend stocks with long histories of reliability and high yields, on the order of 7%. Let’s take a closer look.
Spirit Realty Capital (SRC)
First up is Spirit Realty Capital, a real estate investment trust. It’s no surprise to find a REIT as a dividend champ – these companies are required by tax codes to return a high percentage of profits directly to shareholders, and frequently use dividends as the vehicle for compliance. Spirit Realty owns a portfolio of commercial properties, occupied by major retail names. Spirit’s tenants include such well-known actors as Dollar Tree, Home Depot, and Walgreens. Overall, Spirit has more than 2,000 properties with 52.6 million square feet, an occupancy rate of 99.8%, and a total of 334 tenant companies. Spirit’s real estate portfolio value totals some $8.4 billion.
In a point of…