As we close in on the final quarter of 2022, investors are looking for an answer to one question: was June’s low the bottom for stocks, or do they have more room to fall? It’s a serious question, and there may be no easy answer. Markets are facing a series of headwinds, from the high inflation and rising interest rates that we’ve grown familiar with to an increasingly strong dollar that will put pressure on the upcoming Q3 earnings.
Weighing in on current conditions from Charles Schwab, the $8 trillion brokerage firm, chief global investment strategist Jeffrey Kleintop notes these chief factors that are on investors’ minds, before coming down firmly in favor of a bullish stance of high-yield dividend stocks.
“We talk about characteristics of stocks that are outperforming across sectors and those tend to be value factors and high quality factors. The one I’ve been focused on most lately is high dividend payers… They’ve done incredibly well and usually a high dividend is a sign of good cash flow and a good balance sheet, and investors are seeking that out,” Kleintop noted.
So, let’s take a look at two of the market’s dividend champs, high-yield dividend payers that have the Street’s analysts like going forward. According to TipRanks’ database, both stocks hold Strong Buy ratings from the analyst consensus – and both offer dividends of up to 8%, high enough to offer investors a degree of protection from inflation.
Ares Capital Corporation (ARCC)
First up is Ares Capital, a business development company (BDC) focused on the small- and mid-market enterprise sector. Ares provides capital access, credit, and financial instruments and services to companies that might otherwise have difficulty accessing services from major banking firms. Ares’ target client base are the small businesses that have long been the drivers for much of the US economy.
At a macro level, Ares has outperformed the overall markets so far this year. The firm’s stock is down – but only by 3% year-to-date. This compares favorably to the 16% loss in the S&P 500 over the same time…