3 Stocks to Buy Ahead of the Coming VIX Spike
There are already many pieces of the puzzle that point to volatile times ahead. Undoubtedly, volatility can be a trader’s best friend, but for investors, volatility paints a completely different scenario. It is true that in the world of financial markets we cannot guess the future. However, as good investors we can prepare ourselves for different scenarios, the VIX spike being one of them. Having said that, you would be wise to consider these stocks to buy before the VIX spikes.
In this case, within the different sectors of the market, there are stocks that can serve as defensives against volatile scenarios. These stocks can even benefit from volatility to have a better performance, let’s take a look at some of them.
Altria Group (MO)
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Altria Group, Inc. (NYSE:MO) is a prominent company in the tobacco and e-cigarette sector. It has recently made significant moves that make it an attractive stock to consider for your portfolio. This is especially true in anticipation of a possible rally in the VIX (volatility index).
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As for their financial situation, in the second quarter of 2023, they recorded net revenues of $6.5 billion. This is a slight decrease compared to the same period in 2022. However, if net excise tax revenues are taken into account, they actually experienced an increase of 1.2%, reaching $5.4 billion. The reported tax rate decreased significantly by 19.9 percentage points, while the adjusted tax rate remained stable. Reported diluted EPS experienced an impressive increase of more than 100% to $1.19, and adjusted diluted EPS increased by 4% to $1.31.
In addition to their strategic moves, they announced a 4.3% increase in their regular quarterly dividend, raising it to $0.98 per share. This dividend will be payable on October 10, 2023, demonstrating its commitment to returning value to its shareholders. With this increase, the new annualized dividend rate stands at $3.92 per share, offering an attractive dividend yield of 9.1%, based on the closing share price as of August 23, 2023. Consider this as one of your stocks to buy before the VIX spikes.
Kinder Morgan (KMI)
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Kinder Morgan, Inc. (NYSE:KMI) is a leading energy infrastructure company. It specializes in the transportation and storage of various energy products, such as natural gas and crude oil. The company is often considered an attractive stock for your investment portfolio for several reasons.
Firstly, it is known for its consistent dividend payouts. The recent approval of a cash dividend of $0.2825 per share for the second quarter of 2023 reflects a 2% increase throughout the same period in 2022. This demonstrates its commitment to providing value to its shareholders through regular dividends.
From a financial perspective, although there was a slight decline in net income compared to the same quarter last year, the company still recorded a healthy distributable cash flow (DCF) of $1.076 million for the second quarter of 2023. Adjusted earnings were $540 million in the quarter, and both adjusted EBITDA and DCF exceeded its 2023 plan. These figures suggest that the company is effectively managing its financials despite some fluctuations.
In terms of recent developments, Kinder Morgan Tejas Pipeline LLC (Tejas), a subsidiary of KMI, is involved in an expansion project in partnership with Howard Energy Partners. This project aims to expand natural gas transportation systems in the Eagle Ford region of Texas. It involves the construction of pipelines and associated facilities to deliver up to 2 billion cubic feet per day (Bcf/d) of natural gas to U.S. Gulf Coast markets. This expansion reflects its dedication to meeting the growing demand for natural gas transportation.
Ventas (VTR)
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Imagine Ventas, Inc. (NYSE:VTR) as a company that specializes in owning and managing important places, especially in healthcare and senior housing. They are like the gatekeepers of places where people receive medical care or enjoy retirement.
Most excitingly, its senior property portfolio grew by an impressive 14% compared to the prior year. This was due to an increase in revenue per occupied room and expense control, which means they are doing better business and making more money.
In financial news, Ventas Realty, a part of Ventas, plans to raise $750 million through the issuance of convertible bonds. These bonds function as a loan that they promise to repay in the future with interest. They will use this money to pay down debt and other major expenses. This move is also related to maintaining its special status as a real estate investment trust (REIT) for tax purposes. This and the other stocks we mentioned all earn their spot on our list of stocks to buy before the VIX spikes.
As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.
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