The U.S. economy is sending favorable signs for dividend stocks, according to Bank of America.
In March, the U.S. BoFa’s Regime Indicator - an economic metric - showed the biggest increase since July 2021, after entering a recovery phase in February, equity analyst Savita Subramanian wrote in a note.
When it comes to selecting names, it’s important to look for companies that pay above-market dividend yields that are safe, Subramanian wrote in his note.
For those characteristics, look at the second quintile of the Russell 1000 for dividend yield. This includes the second tranche of companies with dividend yields in the index. Its filter avoids owning troubled companies that could enter the top quintile, the group with the highest dividend yields if prices fall ahead of potential dividend cuts.
Here are some of the names on Bank of America’s list:
- Southern Copper Corporation
- AES Corporation
- Vail Resorts
- HP Inc.
- Campbell Soup P
- Citigroup
- APA Corporation
- HF Sinclair
- Always
AES and Sempra are two names in the utilities sector, yielding 4% and 3.4%, respectively.
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In general, utilities are known for their predictable dividends. While they have lagged the market over the year, there have been some gains in recent months. The Utilities Select Sector SPDR Fund (XLU) has gained 5% so far this year and is up 4.9% over the past month.
In late February, Sempra CEO Jeffrey Martin said the company had increased its capital plan to $48 billion to fund initiatives such as grid modernization.
Sempra shares are down about 4% so far this year, while AES has lost nearly 10%.
Several names in the energy sector are also on the list, including APA and HF Sinclair. APA has a dividend yield of 3.1%, while HF Sinclair yields 3.5%.
In January, APA announced an agreement to acquire Callon Petroleum in an all-stock $4.5 billion transaction.
APA shares have lost nearly 10% since the beginning of the year, while HF Sinclair is up 3% in the period.
Finally, Citigroup was among the financial names highlighted by Bank of America. Citi posted a revenue surprise in the first quarter of this month, thanks in part to better-than-expected results in its investment banking and trading divisions.
Shares are up 22% so far this year.
|Disclaimer
The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.|
Original article published on Money.it Italy 2024-05-30 07:57:00. Original title: I dividendi migliori? Ecco le azioni da comprare secondo Bank of America
