August turned out to be the worst month for Wall Street in 2023, with stocks taking a battering as investors remained uncertain about the Fed’s future course of action with its interest rate hikes.
A series of data released in the last week of August indicates that the economy is softening with the labor market finally starting to cool. This has raised hopes that the weak economic data may pose a barrier for the Fed to hike interest rates in its upcoming September FOMC meeting.
However, the minutes of the Fed’s July FOMC meeting hint at more interest rate hikes in the near term. A majority of central bank officials are in favor of further interest rate hikes as inflation remains elevated and well above the Fed’s 2% target.
The Fed’s hawkish stance has made market participants scramble for direction, which has seen stocks suffer in September as well. On Sep 6, all three major indexes once again ended in the red. The Dow, the S&P 500 and the Nasdaq ended 0.6%, 0.4% and 0.1%, down, respectively.
Even if the central bank keeps interest rates unaltered in its September meeting, more rate hikes are likely in the coming months, as indicated by Fed Chair Jerome Powell in his speech at the Jackson Hole Annual Policy Symposium last month. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” he said.
This is likely to keep markets volatile for an extended period, or at least till investors get a clear picture of when the Fed plans to end its monetary tightening cycle. Moreover, the first interest rate cut is unlikely before 2025, although some believe it might take place sometime in late 2024.
Stocks in Focus
Given this situation, opting to invest in dividend-paying stocks would be a prudent choice. The ability of dividend stocks to withstand market volatility is attributed to their sound business strategy and track record. An astute investor should thus want to focus on stocks that have recently increased their dividend payouts. Five such stocks are Summit Financial Group, Inc. SMMF,Greif, Inc. GEF,Bank of Montreal BMO,Avnet, Inc. AVT and Deere & Company DE.
Summit Financial Group, Inc. provides community banking services primarily in the Eastern Panhandle, Southern and North Central regions of West Virginia, the Northern, Shenandoah Valley and Southwestern regions of Virginia and the central region of Kentucky, through its bank subsidiary, Summit Community Bank, Inc. SMMF currently carries a Zacks Rank #1 (Strong Buy).
On Aug 25, Summit Financial Group declared that its shareholders would receive a dividend of $0.22 a share on Sep 29, 2023. SMMF has a dividend yield of 3.23%. Over the past five years, Summit Financial Group has increased its dividend six times, and its payout ratio at present sits at 21% of earnings.Check Summit Financial Group’s dividend history here.
Greif, Inc. is a leading global producer of industrial packaging products and services with manufacturing facilities located in over 40 countries. GEF offers a comprehensive line of rigid industrial packaging products and containerboard and corrugated products for niche markets in North America. Greif is also a leading global producer of flexible intermediate bulk containers.
On Aug 29, Greif announced that its shareholders would receive a dividend of $0.52 a share on Oct 1, 2023. GEF has a dividend yield of 2.75%. Over the past five years, Greif has increased its dividend four times, and its payout ratio at present sits at 29% of earnings. Check Greif’s dividend history here.
Bank of Montreal is one of the largest banks in North America and one of Canada’s oldest banks. BMO offers a complete range of financial services in chosen markets on both sides of the Canada-United States border. Bank of Montreal offers not just financial products, but knowledge-based solutions, custom-made to add value to its clients’ financial affairs.
On Aug 29, Bank of Montreal declared that its shareholders would receive a dividend of $1.11 a share on Nov 28, 2023. BMO has a dividend yield of 5.16%. Over the past five years, Bank of Montreal has increased its dividend 15 times, and its payout ratio at present sits at 46% of earnings.Check Bank of Montreal’s dividend history here.
Avnet, Inc. is one of the world’s largest distributors of electronic components and computer products. AVT’s customer base includes original equipment manufacturers, electronic manufacturing services providers, original design manufacturers, and value-added resellers. Avnet maintains an extensive inventory, including electronic products from more than 300 component and system manufacturers, which it distributes to customers worldwide.
On Aug 29, Avnet declared that its shareholders would receive a dividend of $0.31 a share on Sep 27, 2023. AVT has a dividend yield of 2.28%. Over the past five years, Avnet has increased its dividend seven times, and its payout ratio at present sits at 14% of earnings.Check Avnet’s dividend history here.
Deere & Company is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. DE has an advantage in most farm machinery categories as its machines come with advanced features and are better constructed than its competitors.
On Aug 30, Deere & Company announced that its shareholders would receive a dividend of $1.35 a share on Nov 8, 2023. DE has a dividend yield of 1.19%. Over the past five years, Deere & Company has increased its dividend seven times, and its payout ratio at present sits at 15% of earnings. Check Deere & Company’s dividend history here.
Avnet, Inc. (AVT): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
Bank Of Montreal (BMO): Free Stock Analysis Report
Greif, Inc. (GEF): Free Stock Analysis Report
Summit Financial Group, Inc. (SMMF): Free Stock Analysis Report
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This article originally appeared on Zacks
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