Multi-decade high inflation and the Fed’s decision to hike interest rates several times this year have caused the benchmark stock indexes to suffer severe volatility since the beginning of the year. However, impressive corporate earnings reports and the expected economic recovery have been major supports. According to FactSet, of the 56% S&P 500 members that had reported fourth-quarter results as of February 4, 76% beat EPS estimates, and 77% topped revenue estimates.
The Labor Department’s consumer price index data for January is expected to show a 7.2% year-over-year increase in inflation. If so, this would represent the fastest inflationary increase since February 1982. Since this could increase stock market volatility further, dividend-paying stocks could be ideal bets now to ensure a steady income stream. According to IHS Markit, dividends in the United States are expected to increase 5.4% this year to $670 billion. Also, investors’ interest in dividend stocks is evident in the SPDR Portfolio S&P 500 High Dividend ETF’s (SPYD) 4.3% returns over the past three months.
