"An ounce of prevention is worth a pound of cure" and the
Federal Reserve chairwoman, Janet Yellen has been rightly following
the saying, as she and her policy-making committee voted to keep
the benchmark interest rate unchanged at least for another month.
Market experts cited that the overseas turmoil, derailment of the
Chinese economy and the descending prices of crude oil and
commodities have rattled investors worldwide, and the decision not
to go for a rate hike seems a wise one in the given scenario.
So, the federal funds rate is left untouched at 0.25% to 0.50%
for now, providing the stock market with the much-needed impetus.
The major indices ended trading in the green yesterday. The Dow
Jones Industrial Average climbed 74.23 points, or 0.4% to
17,325.76, while Nasdaq Composite rose 35.30 points or 0.8% to
4,763.97. The S&P 500 advanced 11.29 points or 0.6% to
However, the policy makers hinted that they have adopted a
cautious stance given the current situation prevailing in the
broader economy, but plans for a rate hike remain in the cards.
Last December, the Fed had planned up to a four quarter-point rise
in interest rate in 2016. However, the financial mayhem beyond the
borders compelled it to retreat from its plan, and adopt a more
steady and meticulous approach. Market pundits now expect two
quarter-point rate hikes by the end of the year.
The Fed still remains cautiously optimistic about the U.S.
economy and as the situation improves worldwide, the U.S. will be
ready to lead the squad. The economy is not in bad shape as some of
the risk-averse investors perceive. The employment picture is good
enough to clear the way and inflation is crawling toward the
The Fed now anticipates the U.S. economy to expand at a pace of
2.2% this year, marginally lower than 2.4% projected earlier,
thanks to the recent turbulence. On the other hand, inflation is
likely to hover around 1.2% by the end of the year, falling shy of
the Fed's target of 2%. The unemployment rate, which was 4.9% in
February, is estimated to be 4.7% by the end of this year, 4.6% by
2017 and 4.5% by 2018.
While the global markets are still trying hard to make their way
out of the woods, domestic investors welcomed the Fed's decision,
which to an extent calms the jitters that rose yesterday, when
discouraging retail sales data for February and a downward revision
to January retail sales point to some degree surfaced. (Read:
5 Great Stocks to Buy Despite Weak Retail Sales
). Definitely, the eventful financial world might perplex you and
your investment precision, so better to bet your bucks on safer
Where Lies the Safe Haven?
Modest economic growth, impressive employment statistics,
on renewed hope for an output freeze, and favorable manufacturing
data are doing a commendable job in alleviating investors'
concerns. Yet any unprecedented macroeconomic headwind can make
them impatient. So be very careful when it comes to
You should diligently choose your portfolio of stocks that may
give the best returns. The year so far has not been much investor
friendly and what the future has in store is hard to predict.
However, it is still not impossible to locate greener pastures.
On that note, while building a portfolio, one should consider
stocks with a high dividend yield. Investors prefer an income
generating stock, and therefore a dividend paying stock is always a
John Davison Rockefeller once said, "Do you know the only thing
that gives me pleasure? It's to see my dividends coming in." People
looking for regular income from stocks are most likely to be
inclined toward those companies that have a track of consistent and
incremental dividend payments. They are safer bets, particularly in
a low-rate environment, as they provide a cushion during economic
5 Rock-Solid Stocks with Great Dividend Yields
We have picked five stocks that hold promise in a dwindling
market. Not only do these stocks carry a favorable Zacks Rank #1
(Strong Buy) or #2 (Buy), but these also have a dividend yield of
3% or greater.
We have also resorted to our
Zacks Style Score
, which helps in selecting stocks with strong upside potential. If
you are familiar with the Zack Style Score system, then it will not
be hard to get a grasp over the VGM score. Here, V stands for
Value, G for Growth and M for Momentum. The VGM score is simply a
weighted combination of these parameters and is a comprehensive
tool that allows investors to filter through the standard scoring
system and better choose winning stocks.
American Eagle Outfitters, Inc.
, a retailer of apparel and accessories in the U.S. and
internationally, is a solid bet. The stock flaunts a Zacks Rank #1
and has a long-term earnings growth rate of 10%. Based in
Pittsburgh, PA, the company has a dividend yield of 3.1% with a VGM
score of "A."
Investors can also count on
Ford Motor Co.
, which through its subsidiaries, designs, manufactures, markets,
finances, and services automobiles. The stock holds a Zacks Rank #2
and a long-term earnings growth rate of 9.1%. This Dearborn,
MI-based company has a dividend yield of 4.4% with a VGM score of
We also suggest investing in
, which carries a Zacks Rank #2 and has a long-term earnings growth
rate of 12.4%. This El Segundo, CA-based designer, manufacturer,
and marketer of a range of toy products globally has a dividend
yield of 4.7% with a VGM score of "A."
Another stock that investors may look forward to is
Capella Education Co.
, holding a Zacks Rank #2, with a long-term earnings growth rate of
7.9%. This Minneapolis, MN-based online postsecondary education
services company has a dividend yield of 3.1% with a VGM score of
Last but not the least is
Hersha Hospitality Trust
, a real estate investment trust. The company carries a Zacks Rank
#2 and has a long-term earnings growth rate of 9.7%. This
Cumberland, PA-based company has a dividend yield of 5.2% with a
VGM score of "B."
A dividend is a distribution of part of the company's earnings,
given to its stockholders either on a quarterly basis or
semi-annually or annually. The willingness and ability on the part
of the company to pay dividends regularly and increase the same
from time to time sends a loud message about its soundness,
prospects and performance as well as its underlying fundamentals.
These together form the base of our investment strategy.
Definitely, do not forget to use the
Zacks Stock Screener
to find other stocks with a winning combination.
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Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
FORD MOTOR CO (F): Free Stock Analysis Report
AMER EAGLE OUTF (AEO): Free Stock Analysis
CAPELLA EDUCATN (CPLA): Free Stock Analysis
MATTEL INC (MAT): Free Stock Analysis Report
HERSHA HOSPTLY (HT): Free Stock Analysis Report
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