3 Top Dividend Stocks to Buy for a Tricky February
After registering significant gains in 2023, major bourses climbed northward in January, with the Dow breezing past the 38,000 mark and the S&P 500 entering a bull market. For January, the Dow and the S&P 500 gained 2.1% and 3.3%, respectively. The tech-laden Nasdaq also posted a healthy gain of 3.3%, per FactSet data.
Last month, stocks gained momentum as fears of a looming recession were squashed by strong economic growth in the final quarter of 2023. The U.S. economy expanded at an annualized rate of 3.3% in the fourth quarter of 2023, banking on an uptick in consumer outlays and business investments.
At the same time, signs of inflationary pressure cooling down helped the stock market scale upward. The personal consumption expenditures (PCE) price index increased by 1.7% in the fourth quarter, less than the third quarter’s increase of 2.6%, and is now hovering near the Federal Reserve’s target of 2%.
However, the last trading session of January was disappointing, and the same is expected to continue all through February as well. This is because Fed Chairman Jerome Powell categorically said there won’t be any interest rate cut in March.
Fed officials are looking for further encouraging economic data to decide on rate cuts. They said it won’t be fitting to lower the federal funds rate until and unless inflation moves justifiably toward the 2% goal.
Rate cuts tend to boost consumer outlays, decrease the cost of borrowing and help the economy grow along with the stock market. But with the Fed throwing cold water on the prospects for a March rate cut, stocks are well-poised to wobble this month.
February, anyhow, is a dicey month for stocks, particularly in an election year. Per Dow Jones Market Data, the S&P 500 has posted an average negative return of 0.1% in February since 1928. And in an election year, the broader index has delivered an average drop of 0.3% in February.
Similarly, back in 1897, the Dow, on average, gave a negative return of 0.2% in February. The blue-chip index, on average, declined 1.1% in February during an election year, added the Dow Jones Market Data.
So, with things not looking hunky-dory for the stock market in the near term, investors should place their bets on dividend-paying stocks such as Manulife Financial Corp MFC, First Horizon FHN and Canadian Imperial Bank of Commerce CM for a steady income since their solid business model helps them to remain tranquil toward market volatility. The stocks boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Manulife Financial is one of the dominant life insurers in Canada and is rapidly growing its operations in the United States. Manulife Financial has a dividend yield of 4.7%.
In the past 5-year period, MFC has increased its dividend 13 times, and its payout has advanced nearly 9.2%. Check Manulife Financial’s dividend history here.
The Zacks Consensus Estimate for its next-year earnings has moved up 1.1% over the past 60 days. MFC’s expected earnings growth rate for the current year is 3.8%. Manulife Financial currently has a Zacks Rank #2.
First Horizon is a financial services company. First Horizon has a dividend yield of 4.1%.
In the past 5-year period, FHN has increased its dividend two times, and its payout has advanced 1.3%. Check First Horizon’s dividend history here.
The Zacks Consensus Estimate for its current-year earnings has moved up almost 6% over the past 60 days. FHN’s expected earnings growth rate for the next year is 7.8%. First Horizon currently has a Zacks Rank #2.
Canadian Imperial Bank of Commerce is a leading North American financial institution that has branches and offices across Canada, the United States, and around the world. Canadian Imperial Bank of Commerce has a dividend yield of 5.6%.
In the past 5-year period, CM has increased its dividend 14 times, and its payout has advanced 5.5%. Check Canadian Imperial Bank of Commerce’s dividend history here.
The Zacks Consensus Estimate for its current-year earnings has moved up 7.8% over the past 60 days. CM’s expected earnings growth rate for the current year is 5.2%. Canadian Imperial Bank of Commerce currently has a Zacks Rank #1.
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Manulife Financial Corp (MFC) : Free Stock Analysis Report
First Horizon Corporation (FHN) : Free Stock Analysis Report
Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report
