There will be more financial crises. The next one may have begun. The ongoing coronavirus outbreak is still spreading, and if the current trends continue, it could spur the next financial crisis. Read This Story: Coronavirus: Looking a Black Swan in the Eye The outbreak has already put the oil markets back into a bear market. It has also hit other sectors pretty hard. Numerous companies have issued earnings warnings as a result of the outbreak. Investors are flocking to defensive sectors like utilities, which now represents the best-performing S&P 500 sector so far this year. With the surge in utilities this year, there really aren't a lot of bargains left in that space. As investors have flooded into utilities, yields have become depressed. Other defensive sectors like real estate and consumer staples have also performed well. The health care sector, also historically viewed as a defensive sector, has lagged. With the uncertainty in the market, I decided to screen for a model defensive income portfolio for investors. I looked for stocks from defensive sectors, with a yield of at least 4%, low volatility, a dividend payout for the last quarter of less than 80%, and at least a consensus overweight rating from analysts. I came up with the following 10 companies. This is a diverse group of defensive companies, with a yield averaging 5.0%. The volatility of the group, as measured by the five-year beta, is nearly 40% lower than the S&P 500 Index. Consider these "interesting" companies to research in greater depth for adding to or building a defensive portfolio. As always, you have to determine whether these companies are right for your own portfolio. You may have slightly different preferences and you should always do your own due diligence. But here's hoping we all stay healthy this year, that coronavirus cases begin to decline soon, and there is a little bit of life left in the bull market. Editor's Note: Whatever happens with the coronavirus, the tried and true methods for scoring big profits in the stock market will continue to hold sway. An expert in these methods is our colleague, Jimmy Butts. Jimmy Butts is chief investment strategist of the premium trading service Top Stock Advisor. He's skilled at pinpointing hidden gems that possess intrinsic merits. These stocks are ignored by Wall Street but they eventually enrich early investors. Getting in on the ground floor means you can buy these stocks at bargain prices and watch your stake soar before the rest of the investment herd catches on. For Jimmy's latest "contrarian" value plays, click here now. |
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