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Jefferies Lays Out Global Stocks Offering 'Rock Solid' Dividends

Jefferies Lays Out Global Stocks Offering 'Rock Solid' Dividends
(Dollar Photo Club)

Monday, 15 June 2020 10:56 AM

As investors scramble to find safe sources of income during a global rout, Jefferies strategists have outlined what they view as the most resilient dividend-paying companies.

“Dividends are a theme for all seasons as high yield stocks have outperformed during both rising and falling U.S. bond yields, irrespective of market direction and across economic cycles,” analysts led by Desh Peramunetilleke wrote in a note to clients. The once-steady Global X SuperDividend U.S. exchange-traded fund (ticker DIV) is down a third since mid-February on fears of lower payouts.

According to Jefferies, the safest bets for dividends are health-care, technology and consumer staples stocks, while financials, REITs and consumer discretionary companies are most at risk for dividend cuts or suspensions.

During the 2008 global financial meltdown, nearly half of companies around the world slashed their dividends, while Wall Street is modeling about a third of corporations cutting their payouts as a result of the pandemic, according to Jefferies.

Goldman strategists, for example, predict S&P 500 companies will slash dividends by about 25% in 2020, and says payouts won’t fully recover until 2024.

Jefferies also sees a long road to recovery for curtailed U.S. payouts. A decade after the financial crisis, for example, about 46% of U.S. companies that cut dividends still hadn’t returned to prior payout levels, the strategists said. By contrast, emerging markets saw deeper cuts but snapped back faster.

Here are Jefferies’ global picks for dividend returns:

  • Emerging markets; Asia excluding Japan: China Mobile Ltd., DBS Group Holdings, Rio Tinto Ltd., Tata Consultancy Services, Wal-Mart de Mexico SAB
  • U.S.: Cisco Systems Inc., Eastman Chemical Co., Honeywell International Inc., Medtronic Plc, Procter & Gamble Co.
  • Europe: Carlsberg A/S, Mondi Plc, Novartis AG, Roche Holding AG, Sage Group Plc
  • Japan: Kyocera Corp., Nitto Denko Corp., Secom Co., Seven & I Holdings Co., Z Holdings Corp.

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As investors scramble to find safe sources of income during a global rout, Jefferies strategists have outlined what they view as the most resilient dividend-paying companies.
jefferies, global, stocks, rock solid, dividends
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2020-56-15
Monday, 15 June 2020 10:56 AM
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