From multi-day losing streaks to overnight rallies, it has been a roller coaster ride for markets this year. For investors looking to ride out the unpredictability, CNBC PRO has screened for low-volatility stocks with income in the U.S. and beyond, that have outperformed the beaten-down market. Stocks ended last week lower as markets weighed the Federal Reserve’s decision to hike rates by 75 basis points — its largest increase since 1994 — and signals that a similar hike could be on the cards in July. Meanwhile, several key pieces of economic data fell short of forecasts . The Dow Jones Industrial Average once again closed under the 30,000 mark after dipping below that level on Thursday for the first time since January 2021. T he S & P 500 was down 5.8% for the week, while the Nasdaq Composite ended the week 4.8% lower. Given this volatility — which is expected to persist given the still-uncertain macro landscape — investors looking to rotate into safer bets could find solace in a portfolio of historically low-volatility stocks that also pay dividends. To identify these names, CNBC Pro used FactSet data to weed out the MSCI World stocks that are more volatile than the index. The remaining names have a 3-year historical beta of less than 1. “Beta” is a measurement of a stock’s volatility ; a beta of 1 means that a stock’s volatility is equal to the market, whereas a beta below 1 means that stock is less volatile than the market. CNBC Pro then screened for stocks that are up this year and pay a dividend of at least 2%. They are also buy-rated by the majority of analysts, with average potential upside of at least 10% over the next 12 months, according to FactSet data. Utilities Nearly a quarter of the 19 names on the screen were utility stocks. The sector is traditionally seen as a safe haven during periods of market upheaval, given its steady, regulated earnings, inflation-based contract clauses and higher dividend income relative to other sectors. The sector is up 1% this year — one of just two sectors on the MSCI World that are in positive territory. It also enjoys the highest dividend yield among the 10 major sectors on the index, according to FactSet data. Japan’s Kansai Electric Power and Tokyo Gas were among the utility names that made the screen, with historical beta of 0.3 and 0.2 respectively. Shares in Kansai Electric are up 18.1% this year, but analysts give the stock upside of more than 30%. It also has a dividend yield of 3.9%. Meanwhile, Tokyo Gas has gained 29.8% this year, but analysts put its upside at more than 20%. Other utility stocks that made the screen include Germany’s RWE and Exelon Corp in the U.S. Biopharma A number of biopharma stocks turned up on the screen. The sector is seen as relatively stable for investors when markets churn, due to its ability to generate free cash flow and pay dividends. British-Swedish pharma giant AstraZeneca has historical beta of just 0.2 and pays a dividend yield of 2.5%. The stock has gained 17.1% year-to-date, but analysts have a consensus potential upside of 25.9%. Analysts also give Illinois-based biopharmaceutical firm Abbvie potential upside of 33.7%. The stock has risen a modest 2.3% this year and pays a dividend yield of 4.1%. French pharmaceutical giant Sanofi made the list too. The stock is up 7.5% this year, but analysts see further average upside of 12.4%. Consumer staples A host of consumer staples also made the screen. French supermarket chain Carrefour has the lowest historical beta of the lot at just 0.3. The stock is up 11.4% this year, but analysts believe the stock could still see upside of a further 14.3%. It also pays a dividend of 3.4%. British American Tobacco also made the list. Shares of the company has surged 23.3% this year, but analysts covering the stock think it could still go up 11.4%. British tobacco firm Imperial Brands also made the screen, with the stock expected to have potential upside of 13.3%. Companies that manufacture or sell consumer staples are seen as safe bets in times of volatility, as demand for their products often remain stable even during an economic downturn. Financials and more The screen also featured a host of financial stocks. Japanese insurer Tokio Marine has historical beta of 0.8, a dividend yield of 4% and has potential upside of 29%, according to FactSet. Other financial stocks that made the screen include Canadian insurer Intact Financial , German bourse operator Deutsche Boerse and Japan’s MS & AD Insurance . Canadian fertilizer company Nutrien also made the list. The stock has potential upside of 89.8%, according to FactSet. That’s even after the stock has gained 18.6% this year. Barclays analyst Benjamin M. Theurer described the company as a “best-in-class” operator that will continue to generate steady earnings from its retail business. The stock is also seen as an inflation hedge . “We see lasting supply/demand tightness beyond 2023, which bodes well for the broader group despite recent outperformance against major indexes,” Theurer wrote in a note on Jun. 1.
Leave a Reply