Think you can avoid the S&P 500's pain with high-dividend and energy stocks? It's not working anymore, for most stocks.
Just four stocks in the S&P 500 yielding 3.5% or more, Conagra Brands, AbbVie, Kraft Heinz and VICI Properties, are still up both since June and for the entire year, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's a huge wake-up call for investors who bet on energy and loads of high dividend stocks thinking they could sidestep the market's pain.
Reality is there's few if any places to hide. The Energy Select Sector SPDR ETF, which shot up 57% in the first five months of the year tanked 21% since June. That's even worse than the S&P 500's 7.2% drop since June. And the iShares Select Dividend ETF, which yields 3.2%, is down nearly 10% since June.
"Caution abounds about the outlook," said Mark Hamrick, senior economic analysts at Bankrate.com. "Economists recently surveyed by Bankrate put the odds of a recession over the next 12 to 18 months at about even, or 1 in 2. That is worse than the previous quarter before when the collective wisdom of the participants put recession odds at 1 in 3."
S&P 500 Dividends Aren't Going To Save You
Dividends typically account for a third of the S&P 500's long-term returns. And high dividends do offer a sense of security in a bear market. But much of that safety is false.
Just look at the numbers this year. More than 90% of the S&P 500 stocks that yield 3.5%, or more, are down since June. Many of the sectors that had been holding up also pay fat dividends. But this whole high-dividend theme is rolling over. Fears of a recession put into doubt demand for sectors known for high dividends, including energy.
Chevron, for instance, was a darling all year until June. Shares of the oil company rose nearly 50% in the first five months of the year and yielded nearly 4% on top of that. But now, since June, shares are down 19%. So much for safety.
But there's a handful of S&P 500 stocks that managed to sidestep the pain. It's a tiny group, though.
Hot Dogs And Popcorn Pop In The S&P 500
Conagra Brands, the connoisseur of processed foods like hot dogs and popcorn, is your best example of a durable high-yield stock in this rough time for most S&P 500 stocks.
Shares of the consumer staples company are up 6% since June. That pulls shares of Conagra into the black for the year by 1.9%, while the S&P 500 is down 19%. What's more, Conagra yields 3.6%. That's attractive compared to the 1.5% yield of the S&P 500. It's even competitive with the 3.2% yield of the iShares Select Dividend ETF and 3.4% yield of the Energy Select Sector SPDR. Conagra isn't growing per se. Analysts think its adjusted profit this year will fall nearly 11% from 2021. But it's stable. Conagra's revenue is expected to inch up 3% this year.
When it comes to the highest yielding S&P 500 stock still up on the year and since June, it's VICI Properties. The company owns gaming and hospitality properties like Caesars Palace and other locations in Las Vegas. The stock yields 4.7%, which is higher than any of the high yield stocks still up in 2022 and since June.
It's not growing fast, either. Adjusted profit per share is seen inching up 1.1% to $1.78 a share, following a 0.6% gain in profit in 2021. But the stock is up 2.5% this year and at least flat for the year.
But stability is exactly what investors are looking for now, as long as the dividend checks clear.
High-Yielding S&P 500 Stocks Defy Recession Fright
All yield 3.5% or more and are up since June and this year so far
| Company | Symbol | Stock % ch. since June | YTD stock % ch. | Sector | Yield |
|---|---|---|---|---|---|
| Conagra Brands | 5.8% | 1.9% | Consumer Staples | 3.6% | |
| AbbVie | 3.5 | 12.7 | Health Care | 3.7 | |
| Kraft Heinz | 1.0 | 6.4 | Consumer Staples | 4.2 | |
| VICI Properties | 0.01 | 2.5 | Real Estate | 4.7 |
