5 Ultra-Safe Stocks to Counter a Choppy Wall Street

Wall Street has seen stupendous gains during the first seven months of this year. During the said period, the broader S&P 500 soared 21% as market participants placed bets on equities, and pulled back their recession estimates.

August, however, is living up to its standing of being one of the worst months for the stock market. The S&P 500, in particular, has declined more than 4% so far this month. But August’s weak showing has more to it than only seasonal woes.

A recent spike in bond yields adversely impacted the stock market. The 10-year Treasury yield, after touching a trough of around 3.68% in April, has now soared to well above 4.3%. The long-dated Treasury yield now stands at its highest level since 2007.

The rise in bond yields makes the value of a stock’s future earnings look less attractive. After all, higher bond yields mean an investor can get better returns from a far safer investment in comparison to stocks.

So, what led to the increase in bond yields? In the July meeting, most of the Fed officials said that interest rate hikes are required to curtail the risks of elevated inflation. Now, when rates increase, bond prices decline, and their yield increases.

China’s economic concerns, meanwhile, are also dampening investors’ sentiment. China’s exports and imports have declined mostly due to subdued demand for goods globally. China is facing deflation and is in high debt, which could easily spill over to economies across the globe. Not to forget, Evergrande’s bankruptcy has already started to have a spiraling impact on the rest of the world.

But it’s just not in China, Fitch Ratings has in recent times downgraded the U.S. government’s credit rating due to the debt ceiling dilemma in Washington. This has been followed by S&P’s downgrade of some of the regional banks. Moody’s Investor Service had earlier downgraded some of the domestic lenders, and unsettled investors.

Thus, with things looking murkier for investors this August, it’s prudent for them to invest in ultra-safe stocks like Getty Realty Corp. GTY, Trinity Capital Inc. TRIN, Crescent Capital BDC, Inc. CCAP, Golub Capital BDC, Inc. GBDC and Runway Growth Finance Corp. RWAY that can counter such turmoil in the market and deliver a steady stream of income.

These stocks have a low beta (ranges from 0 to 1), making them unfazed by market upheavals. These stocks also provide dividends, meaning they have a sound business model that helps them counter market vagaries. They have a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Getty Realty is a real estate investment trust. The company has a beta of 0.86 and a Zacks Rank #1.

GTY has a dividend yield of 5.8%. The Zacks Consensus Estimate for its current-year earnings has moved up 5.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.6%.

Trinity Capital is an internally managed business development company. The company has a beta of 0.62 and a Zacks Rank #2.

TRIN has a dividend yield of 13.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 1.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 2.3%.

Crescent Capital focuses on originating and investing in the debt of private middle-market companies. The company has a beta of 0.85 and a Zacks Rank #1.

CCAP has a dividend yield of 9.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 7.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 15%.

Golub Capital principally invests in senior secured, mezzanine and second-lien loans of middle-market companies. The company has a beta of 0.62 and a Zacks Rank #2.

GBDC has a dividend yield of 8.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 3.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 39.5%.

Runway Growth Finance is an externally managed business development company. The company has a beta of 0.76 and a Zacks Rank #2.

RWAY has a dividend yield of 12.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 3.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.5%.
Golub Capital BDC, Inc. (GBDC): Free Stock Analysis Report