The fact that yields around the world continued to collapse rocked Wall Street and the financial media. Germany auctioned $3.72 billion in five-year bonds that yielded -0.08%. Many countries across the eurozone, including Austria, Denmark, Finland and the Netherlands, have followed suit.
While dropping yields are natural byproducts of the European Central Bank’s Quantitative Easing program, the fact is still somewhat shocking. Interestingly, these negative yields are not scaring away investors, but instead attracting those who are betting on a German economic rebound and an improving euro.
As far as I’m concerned, the Federal Reserve chairwoman Janet Yellen has made investors a much better offer than the ECB. Read more about similar market insights in my Blue Chip Growth investing advisory.
Last week, Janet Yellen testified before Congress and her comments were overwhelmingly dovish. Although Janet Yellen laid the ground work for a potential key interest rate hike later this year, hardly anyone expects the Fed to act while deflation is rampant.
Interestingly, a Fed interest rate hike is now being viewed as a partisan political issue, particularly after New York Senator Chuck Schumer urged “caution” with raising rates. Janet Yellen remarked that if the U.S. economy keeps improving, the Fed “will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”
Translated from Fed speak, Yellen hinted that the Fed is not seriously discussing raising key interest rates.
With interest rates collapsing abroad, and with the Fed staying the course at home, yield-seekers are left with few options. In my opinion, the only real opportunity is in domestic stocks that are not impacted by the strong dollar and pay a dividend to boot. Stay on top of the best dividend stocks for your portfolio with the help of my Blue Chip Growth investing advisory.
Notice that I didn’t include multinational companies as many multinationals are experiencing erratic sales and earnings growth due to the strong dollar. Many of last year’s popular dividend stocks — like Johnson & Johnson (NYSE:JNJ), McDonald’s Corporation (NYSE:MCD), Microsoft Corporation (NASDAQ:MSFT) and Procter & Gamble Co (NYSE:PG) — are feeling the pinch. However, you can read more about big multinationals in my Blue Chip Growth investing advisory.
Keeping this in mind, I’ve been zeroing in on domestic companies with strong sales, big earnings and solid dividend yields. Stocks to buy include Altria Group Inc (NYSE:MO), Anthem Inc (NYSE:ANTM), HCP, Inc. (NYSE:HCP), L Brands Inc (NYSE:LB), Lowe’s Companies, Inc. (NYSE:LOW) and UnitedHealth Group Inc. (NYSE:UNH).
Louis Navellier has seen booms, plunges and meltdowns (and everything in between) over the last 15 years as editor of the popular Blue Chip Growth investing advisory. Since launching Blue Chip Growth in 1998, he has generated returns of 345% versus the S&P’s 96%, beating the market by more than 3 to 1. Using a combination of quantitative and fundamental analysis, Mr. Navellier identifies the high-quality stocks that will give his readers market-beating returns — in all market conditions. His latest analysis has uncovered five stocks that will weather the coming market volatility and rebound strongly, handing investors who get in now double- and triple-digit returns. You can find complete details here in his latest Special Report: 5 Rotation Rally “Return Giants” That Can Crush Volatile Markets. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
