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Investors in the US stock market have enjoyed an excellent year of returns, but as the new year approaches it may be an opportunity to be tactically defensive. Among other catalysts, last week we saw a notable adjustment in the Fed’s rhetoric, shifting interest rate policy expectations and initiating a jump in volatility. While this is not a dire development, it is something to monitor as it changes investor expectations and reprices some assets.
Furthermore, we are seeing some signs of overly bullish sentiment, while the start of the year can bring some seasonal volatility and large portfolio rebalancing, adding another level of uncertainty. Because of these dynamics, investors who prefer to remain cautious may find solace in more defensive stocks.
Exxon Mobil ((XOM - Free Report) ), Philip Morris International ((PM - Free Report) ) and AT&T ((T - Free Report) ), while not particularly exciting names are three that should weather a period of higher volatility quite well. Their reasonable valuations, status as consumer staples and hefty dividend yields make them logical havens for investors seeking a safe hideout.
Image Source: Zacks Investment Research
Exxon Mobil: Leading Energy Stock
As a global leader in energy, Exxon Mobil benefits from steady demand and robust cash flow, even in uncertain markets. Its strong dividend yield of 3.8% provides an attractive income stream, while its diversified operations cushion the impact of short-term volatility.
Though its stock has not performed very well this year, as the price of crude oil has steadily fallen, the global economy remains very strong. This sturdy economy should provide continued demand for oil, while the price of the commodity appears to have found a floor. Today, Exxon Mobil trades at 13.3x forward earnings, which is below its 10-year median of 17.7x.
Image Source: Zacks Investment Research
Philip Morris International: Shares Rise Amid Business Pivot
Philip Morris offers stability through its status as a consumer staple, with its products enjoying consistent demand. The company’s push into smokeless tobacco and heated products further diversifies its revenue streams and makes it a more appealing investment option for ethically concerned investors.
Philip Morris also pays a generous 4.4% dividend yield and is trading at 19.1x forward earnings, just above its 10-year median of 16.5x. After several years of stagnant earnings growth, PM’s transition to smokeless products has reignited its growth trajectory, with EPS projected to climb 8.3% this year and 10.6% next year.
Image Source: Zacks Investment Research
AT&T: Innovation Sparks Stock Appreciation
AT&T combines a reliable telecommunications business with a generous dividend yield of 4.9%, making it a strong defensive play. After nearly seven years of zero stock appreciation, AT&T has finally seen its stock price push to new record highs this year.
As AT&T explores new ventures like edge computing to help internet companies optimize traffic and partners with Microsoft to shift its 5G network to the cloud, it is reestablishing itself as a relevant player in today’s economy. Today, T is trading at a one year forward earnings multiple of 10.4x, just above its 10-year median of 9.4x.
Image Source: TradingView
Should Investors Buy Shares in T, PM and XOM?
While volatility can be unnerving, taking a defensive stance with high-yield, steady-performing stocks like XOM, PM, and T can help investors maintain stability and income in uncertain times. These picks allow for a balanced portfolio as we move into the new year.
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3 Must Buy Stocks Ahead of a Market Correction
Investors in the US stock market have enjoyed an excellent year of returns, but as the new year approaches it may be an opportunity to be tactically defensive. Among other catalysts, last week we saw a notable adjustment in the Fed’s rhetoric, shifting interest rate policy expectations and initiating a jump in volatility. While this is not a dire development, it is something to monitor as it changes investor expectations and reprices some assets.
Furthermore, we are seeing some signs of overly bullish sentiment, while the start of the year can bring some seasonal volatility and large portfolio rebalancing, adding another level of uncertainty. Because of these dynamics, investors who prefer to remain cautious may find solace in more defensive stocks.
Exxon Mobil ((XOM - Free Report) ), Philip Morris International ((PM - Free Report) ) and AT&T ((T - Free Report) ), while not particularly exciting names are three that should weather a period of higher volatility quite well. Their reasonable valuations, status as consumer staples and hefty dividend yields make them logical havens for investors seeking a safe hideout.
Image Source: Zacks Investment Research
Exxon Mobil: Leading Energy Stock
As a global leader in energy, Exxon Mobil benefits from steady demand and robust cash flow, even in uncertain markets. Its strong dividend yield of 3.8% provides an attractive income stream, while its diversified operations cushion the impact of short-term volatility.
Though its stock has not performed very well this year, as the price of crude oil has steadily fallen, the global economy remains very strong. This sturdy economy should provide continued demand for oil, while the price of the commodity appears to have found a floor. Today, Exxon Mobil trades at 13.3x forward earnings, which is below its 10-year median of 17.7x.
Image Source: Zacks Investment Research
Philip Morris International: Shares Rise Amid Business Pivot
Philip Morris offers stability through its status as a consumer staple, with its products enjoying consistent demand. The company’s push into smokeless tobacco and heated products further diversifies its revenue streams and makes it a more appealing investment option for ethically concerned investors.
Philip Morris also pays a generous 4.4% dividend yield and is trading at 19.1x forward earnings, just above its 10-year median of 16.5x. After several years of stagnant earnings growth, PM’s transition to smokeless products has reignited its growth trajectory, with EPS projected to climb 8.3% this year and 10.6% next year.
Image Source: Zacks Investment Research
AT&T: Innovation Sparks Stock Appreciation
AT&T combines a reliable telecommunications business with a generous dividend yield of 4.9%, making it a strong defensive play. After nearly seven years of zero stock appreciation, AT&T has finally seen its stock price push to new record highs this year.
As AT&T explores new ventures like edge computing to help internet companies optimize traffic and partners with Microsoft to shift its 5G network to the cloud, it is reestablishing itself as a relevant player in today’s economy. Today, T is trading at a one year forward earnings multiple of 10.4x, just above its 10-year median of 9.4x.
Image Source: TradingView
Should Investors Buy Shares in T, PM and XOM?
While volatility can be unnerving, taking a defensive stance with high-yield, steady-performing stocks like XOM, PM, and T can help investors maintain stability and income in uncertain times. These picks allow for a balanced portfolio as we move into the new year.