by Johnson Research Group | April 22, 2013 9:45 am
The weakness across the broad market equity indices are providing investors with a reminder that stocks still have risks associated with them, despite their long-lasting rally. Some investors will over-react to this reminder by shifting their portfolios to cash while other wiser investors will take the opportunity provided to buy a few stocks in one of the hottest groups: high-yielders.
That’s right, dividend-yielding stocks are bucking the historical market trends by leading the market higher over the last year. Typically, this role is reserved for sectors like technology, financials and small-cap stocks as they better represent the “risk on” trade.
This time however, investors are holding on to lower beta, higher income investments. Our outlook remains bullish for this group as an impending flood of cash from the bond markets and other interest rate sensitive investments will fuel demand for income-yielding equity investments.
So, with that in mind, we’ve set our screeners to identify some dividend-yielding equities that have recently gone on sale as a result of the market’s selling.
Click to EnlargeWe’ve written about Midwest property and casualty company Cincinnati Financial (NASDAQ:CINF) a number of times over the last year as its fundamental and technical picture have remained attractive. The company has a sound fundamental picture and delivers a 3.4% dividend yield.
This week, CINF shares breached their short-term technical trendline, but held above intermediate-term trendline support. The company has been blowing away earnings estimates every quarter since Q4 2011 and is set to announce earnings on April 25. We’re expecting good things, meaning that this yielder may be on sale ahead of a run-up in prices.
Click to EnlargeThis little-known company Genuine Parts Company (NYSE:GPC) provides auto parts and other services, mostly through their chain of NAPA locations. The stock boasts just under a 3% dividend on top of one-year growth of almost 15%.
The stock has seen some profit-taking as of late, dragging it down to its 50-day moving average, a trendline it hasn’t touched since 2012. We still love the auto parts companies as people are going to keep fixing their cars, making GPC’s pullback to technical support a dividend yielding opportunity.
Click to EnlargeSysco Corp. (NYSE:SYY) provides foodservice products for the restaurant and “eat away from home” industry. The company is in what we would consider a sweet spot as they are supplying a growing industry as the economy improves and more of us spend discretionary dollars to eat out.
At the same time, they are able to pass cost increases, as a result of inflation, onto their customers. SYY just dipped below its short-term technical trendline support as some profit-taking was initiated. The stock is now re-energized and ready to push higher, especially given the high amount of short interest that is also signaling a potential short squeeze.
With a dividend yield of 3.2%, SYY appears ready to serve -up gains for portfolios. Sorry, we couldn’t resist the pun … but at least it comes with a side of profits.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
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