It has been years since the stock market created as much anxiety among investors as it has this year. The S&P 500 started January near record levels. It has fallen 20% since then. The figure for the NASDAQ is worse. The stocks of some of the foundations of the market runup of the last five years have been badly crippled. Ford is down 45% and Amazon by 35%.
Investors have been told there is no place to run and hide. Gold is sometimes suggested as an alternative to equities. So are fixed income investments, although their returns are fairly low, even with an increase in yields.
All this trouble leaves a small sliver of the market as a “safe harbor”. The stocks in this group will not rise as much as a recovering market. On the other hand, they will not slide as much as indexes will in another wrenching sell off.
Verizon is among the best known brands in America, because its name is on tens of millions of smartphones. Despite competition from AT&T and T-Mobile, its revenue has remained solid, but unexciting. The stock has traded in a narrow range in the last year, between $45.55 and $56.85. Recently, it has traded around $52. While no company is recession proof, people will continue to buy smartphones and be wireless subscribers. Verizon also has an impressive yield of 4.96%
IBM has been called the dumpster fire of big tech. Once among America’s largest and most successful companies, it has been beaten into the second tier of technology corporations by Amazon. Google, and Microsoft. Even mediocre company stock prices find a floor. And, IBM has found its. The stock has traded between $114.56 and $143.73 over the past year. It currently trades just above $141. Its dividend yield is 4.68%.
Ford is a safe stock because it is hard to imagine it could fall further. It also has a yield of 3.53%. After a surge last year, shares have dropped sharply as supply chain problems have hurt sales. However, Ford has a better chance of dominating the EV pick-up market than any other car company. Its F-150 Lightning is the latest edition of the best selling vehicle in America for the last four decades. EV pick-up sales should be in the hundreds of thousands within two years.
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