In a recent analysis, Bank of America Securities highlighted the importance of selecting dividend stocks that are not overly stretched in their payouts, especially as the market experiences volatility. Savita Subramanian, the head of U.S. equity and quantitative strategy at the firm, cautioned that investors should be discerning, as a correction of about 10% typically occurs annually.
The S&P 500 index currently yields 1.02%, and Subramanian suggests looking for companies in the second quintile of trailing dividend yields within the Russell 1000, as these are less likely to be distressed compared to those with the highest yields.
Notable stocks mentioned include Chevron, which has a 3.55% dividend yield and has seen a 31% increase in its stock price this year, driven by elevated oil prices due to geopolitical tensions. Duke Energy, with a 3.59% yield, and Host Hotels & Resorts, yielding 3.56%, also received positive ratings from analysts, indicating potential for growth.
Meanwhile, Gap is set to report its second-quarter results, following disappointing previous results, but analysts remain optimistic about its future performance. Overall, the focus on sustainable dividends could provide a safer investment strategy in uncertain market conditions