The current sell-off of major U.S. stocks and the resulting drop in the primary indexes shows many signs it could continue. Investors have shown anxiety over high valuations of many tech shares. And the earnings season that has just begun could be among the worst since the end of the recession. There are several safe harbor stocks, marked by companies with iron-clad balance sheets, steady earnings and yields that make them attractive as markets shudder.
General Electric Co. (NYSE: GE) posts mediocre earnings most quarters. Fortunately for investors who are drawn to its dividend, that mediocrity is already priced into the shares. GE has a current yield of 3.4%. Revenue and net income have been remarkably steady at $146 billion and $13 billion, respectively, each year for three years in a row. And GE continues to be a multi-legged stool with its mix of medical devices, engine, transportation, financial and infrastructure businesses.
The primary criticisms of Verizon Communications Inc. (NYSE: VZ), which has a yield of 4.4%, are that its landline business continues to fall and that its wireless sector has come under margin pressure because of a price war among the four largest wireless providers in the United States. Nevertheless, Wall Street has been aware of the landline problem for years, and the share price reflects that. Verizon has a better position than the other wireless providers because of its size. Its revenue continues to rise, along with net income. Whatever Verizon’s problems, it will take years for them to unfold, and its position at the top of the wireless market may not disappear at all.
Exxon Mobil Corp. (NYSE: XOM) occasionally is criticized for its diversity, which is also its strength. A mix of exploration and refinery assets around the world exposes it to risks due to geography, oil prices, refinery demand, and exploration and drilling costs. However, Exxon remains the world’s largest energy firm, and one with an unparalleled balance sheet. Once again, it is a company so carefully scrutinized and heavily traded that the risks that any single problem will greatly swing its share price are limited. Its yield sits at 2.6%.
Ford Motor Co. (NYSE: F) is not only the second largest car manufacturer in America. Beyond its 3.1% yield, it has several things that should contribute to future earnings. First among these is its emergence as a force in the Chinese market, the world’s largest. It has finally reached the point where it can challenge market leaders GM and Volkswagen. Its troubled European operations will improve along with the EU economy. And, as a bonus, terrible recall problems with GM in the United States may drive sales to the other largest manufacturers with substantial American market share.
Not many stocks will hold both their price positions and earnings power if the market continues to sell down. But some stocks stand a chance of avoiding the carnage.
SEE ALSO: Warren Buffett’s Top Dividend Stocks
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