The other is on what you should buy. Focus on the trends that remain intact — namely, low-volatility positions. Specifically, dividend stocks.
iShares Select Dividend ETF (DVY)
Click to Enlarge We know, the dividend stocks play is getting tired, but you also have to remember one of the oldest and simplest rules of investing, “the trend is your friend.” The demand for yield-bearing stocks remains high as investors flood out of the bond market and are not willing to take jump into higher volatility equity positions.
The iShares Select Dividend ETF (DVY) offers investors exposure to such dividend stocks.
Phillip Morris International (PM)
Click to Enlarge Tobacco giant Phillip Morris International (PM) continues to see improvements in its technical picture as PM stock recently broke back above its 200-day moving average at the same time that many companies are breaking below their own 200-day trendlines.
Following the trend of dividend stocks taking the lead, PM stock pays a 4.5% yield, which serves well to attract investors looking for lower-volatility bond alternatives.
Another bullish kicker for the PM stock bulls is the low analyst rankings on the stock. Currently, only 53% of the analysts with a recommendation are suggesting it as a “buy”. We like the low analyst ratings as it suggests room for upgrades.
Utilities SPDR (XLU)
Click to Enlarge Another straight-laced sector play for May is the utility sector as represented by the Utilities SPDR (XLU). This ETF is trading 14% higher for the year with little to no volatility. Like other dividend stocks, utilities are benefiting from the yield-foraging crowd that are pouring out of the bond markets.
We consider XLU units a nice allocation to maintain equity exposure through May.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.