AUS
NZ
UK
CA
USA
IND
Headlines
- Recent market volatility has heightened fears on Wall Street, with significant drops in major indices.
- Dividend stocks like Pfizer and Starbucks are highlighted as potentially resilient choices in turbulent times.
- Both companies have faced recent challenges but offer attractive yields and potential for capital appreciation.
2 Reliable Dividend Stocks for August Amid Market Volatility
After a robust first half where the S&P 500 Index ($SPX) and the Nasdaq Composite Index ($NASX) saw double-digit returns with minimal volatility, fears have returned to Wall Street. The Cboe Volatility Index ($VIX), often referred to as the market's fear gauge, spiked to its highest level since March 2020.
On Monday, the S&P 500 experienced its worst day since 2022, and the Nasdaq Composite’s year-to-date gains are now around 9% as the tech rally has stalled. This volatility is likely to concern more cautious market participants.
Dividend stocks can help mitigate some of this volatility. Pfizer (NYSE:PFE) and Starbucks (NASDAQ:SBUX) are two dividend-paying stocks that could be worth considering this August. Both have underperformed in recent years, but their substantial dividend yields provide a buffer, along with potential for capital appreciation.
Pfizer: A Stable Pharmaceutical Giant
Pfizer offers a dividend yield of over 5.5%, making it a solid defensive option in volatile markets. Currently, Pfizer is transitioning from its COVID-19 related revenue streams, with new drug developments and strategic acquisitions like Seagen contributing to its growth.
Pfizer's second-quarter earnings exceeded expectations, leading the company to raise its 2024 revenue guidance by $1 billion, now projected between $59.5 billion and $62.5 billion. The adjusted earnings per share (EPS) guidance was also increased by 30 cents, now ranging from $2.45 to $2.65. Despite some challenges, Pfizer's stock trades at a relatively low price-to-earnings (PE) ratio of just over 11x, making it an attractive option for dividend-seekers.
Starbucks: A Steady Performer
Starbucks, though not immune to economic downturns, offers a dividend yield of 3.1%, more than twice that of the S&P 500 Index. Despite facing various headwinds, including market saturation in North America and challenges in China, the coffee giant continues to focus on its dividend, maintaining a payout ratio of 50%.
Activist investor Elliott Management has recently taken a stake in Starbucks, engaging constructively with its management. This, coupled with the company's ongoing efforts to navigate market challenges, positions Starbucks as a potential candidate for both stable dividends and capital growth.
Both Pfizer and Starbucks present interesting cases for those looking to navigate the current market volatility with the stability of dividend stocks.
