Investors’ sentiment has continued to be negative in September. The S&P 500, the Nasdaq and the Dow have posted a negative return of 4.9%, 6.1% and 3.4%, respectively, in the month-to-date period. The consumer price index, which is the most acceptable gauge for inflation, has moved up by 3.2% and 3.7% year on year for the month of July and August, respectively, after a favorable decline till June at 3%. Investors fear additional monetary stances by the Federal Reserve to meet its 2% inflation commitment over the long run.

The Federal Reserve, in its last policy meeting, provided an interim relief by keeping overnight interest rates unchanged at the 5.25-5.5% range while leaving the doors open for another rate hike by the end of this year. The current overnight interest rate by the Fed is the highest in more than 22 years. Such high interest rates are impacting the cost of borrowing and are putting a dent in the pockets of average Americans and corporate profitability. Prolonged high interest rates may push various industries and the overall economy into a recession.

August retail sales also rose 0.6% from a 0.5% increase in July, showing the resilience of the economy despite a challenging economic environment. The recent increase in prices is mostly due to a big rise in oil prices. Depleting U.S. oil reserves and an increase in oil demand amid tighter supply have pushed oil prices to $95/barrel. Analysts are predicting crude prices to reach $100/barrel after OPEC+ members’ decision to cut oil supply by 1.3 million barrels per day till the end of 2023.

The Fed expects further easing in the labor market to get rid of sticky inflation. The Bureau of Labor Statistics has stated that 187,000 jobs were added in the month of August, while unemployment unexpectedly rose to 3.8%, the highest since February 2022. A strong labor market is still fueling, according to the Fed.

Thus, prudent investors who wish to bet their money for regular income in such volatile market conditions can invest in dividend stocks. These companies pay out regular dividends and remain profitable due to their proven business models and well-established businesses.

Companies that tend to reward investors with a high dividend payout outperform non-dividend-paying stocks during high market volatility. Let us look at solid dividend payers with a price under $10 as of Sep 28, 2023, like Prospect Capital PSEC, Comp En De Mn Cemig CIG and Office Properties Income Trust OPI.

Prospect Capital is a closed-end investment company. This Zacks Rank #1 (Strong Buy) company lends to and invests in private and microcap public businesses and intends to generate both current income and capital appreciation through debt and equity investments.

PSEC has a dividend yield of 12% compared with the Financial – Investment Management industry’s average of 3%.

Prospect Capital has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 6.2% over the last 60 days. PSEC has a price-to-earnings ratio (P/E) of 6.97 compared with 11.80 for the industry.

Comp En De Mn Cemig is a power generation, transmission and distribution company. This Zacks Rank #2 (Buy) company uses power sources such as hydraulic, thermal, wind and solar power and even other more advanced technologies, such as hydrogen fuel cells.

CIG has a dividend yield of 7.9% compared with the Utility – Electric Power industry’s average of 3.7%.

Comp En De Mn Cemig has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 51.7% over the last 60 days. CIG has a P/E of 5.52 compared with 11.30 for the industry.

Office Properties Income Trust is a real estate investment trust company. This Zacks Rank #2 company owns buildings primarily leased to single tenants as well as government entities.

OPI has a dividend yield of 23.9% compared with the REIT and Equity Trust – Residential industry’s average of 4.3%.

Office Properties Income Trust has witnessed the Zacks Consensus Estimate for its current-year earnings increasing nearly 11.2% over the last 60 days. OPI has a P/E of 1 compared with 14.60 for the industry.
Comp En De Mn Cemig ADS (CIG): Free Stock Analysis Report

Prospect Capital Corporation (PSEC): Free Stock Analysis Report

Office Properties Income Trust (OPI): Free Stock Analysis Report

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