Top Dividend-Paying Stocks to Buy If ‘Risk-Off’ Concerns Cause a Market Retreat

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Top dividend-paying stocks to buy if “risk-off” investor sentiment causes a market pulls back feature gold and consumer goods companies.

The top dividend-paying stocks to buy if a market retreat takes hold in the months could be needed, based on the recent data of economic weakness and forecasts of more ahead by the U.S. Bureau of Economic Analysis (BEA). The caution comes partly from a huge slowdown in first-quarter gross output (GO) – a comprehensive measure of total economic spending that includes intermediate stages of production.

GO is described as the top-line of economic production, compared to the bottom-line represented by gross domestic product (GDP), said Mark Skousen, PhD, an economist who is a Presidential Fellow at Chapman University. However, the more commonly used GDP focuses just on final output, giving excess emphasis to consumer spending and undervaluing the importance of the more economically “important” business spending that is tracked by GO, he added.


Mark Skousen, a descendant of Benjamin Franklin, meets with Paul Dykewicz in Philadelphia. Skousen’s premium investment services consist of Home Run Trader, Five Star Trader, TNT Trader and Fast Money Alert.

GO Data Offers Hope for Dividend-Paying Stocks to Buy If ‘Risk-Off’ Sentiment Returns

Skousen, whose flagship investment service is his Forecasts & Strategies investment newsletter, includes five dividend-paying stocks in that portfolio that he calls the so-called “dogs of the Dow.” Those five high-dividend-paying stocks also are undervalued Dow Jones Industrial Average equities, are updated each August and tend to outperform the market every year.

Skousen forecasts the economy and the market to display improvement later in 2020, based significantly on his reading of current Gross Output data and trends. For instance, GO has fallen less than GDP and tends to be a better leading indicator of the economic outlook due to its inclusion of intermediate stages of production.


Gross Output declined in the aftermath of the current political unrest, as well as negative effects of the COVID-19 pandemic and government shutdown of the economy in response to the pandemic, Skousen opined. However, GO might offer still some promise for a meaningful recovery later this year, he added.

Business Spending Shows Aid of Top Dividend-Paying Stocks to Buy Amid Risk-Off Trade

Business spending, which Skousen calls the best signal of overall economic recovery, dropped much less than consumer spending. This may show that the economy is more fundamentally sound than many prognosticators predict.

While some of the business spending came in response to the current COVID-19 pandemic, certain businesses also seized the opportunity to adapt their operations to reopen successfully when government mandates to close are lifted. Thus, the economy may recover faster than expected but not without hiccups. The most recent jobs report also offered optimism that a recovery by year-end 2020 is a strong possibility.

GO, after delivering steady gains in the past 42 consecutive quarters, fell 4% in first-quarter 2020 in real terms, after adjusting for inflation. The last time real GO dove occurred in second-quarter 2009 during the aftermath of the 2008 economic slump. Despite growing, GO’s rise had slowed to 1.1% in fourth-quarter 2019.

Gold Gains Inclusion Among Top Dividend-Paying Stocks to Buy Amid Risk-Off Investing

Gold and silver are “hot,” Skousen wrote in his Forecasts & Strategies newsletter and his four trading services. The gains achieved in those holdings ranged between 10% and 35% during the past two months.

Fueled by easy money, unrestrained government spending and fear among many investors that presumptive Democratic presidential nominee Joe Biden and the political party’s “radical” elements will win the election in November, gold is rising, Skousen said.

“When it comes to the risk-off trade, it’s all about finding quality safe havens proven to protect capital,” said Jim Woods, editor of the Intelligence Report, Successful Investing and Bullseye Stock Trader advisory services. “Gold is one of my preferred safety trades, and specifically mining stocks in the iShares MSCI Global Gold Miners ETF (NASDAQ:RING).”

RING is an exchange-traded fund that features an array of major gold stocks. Investors may choose to buy shares in the gold miners individually or hedge their bets though a fund such as RING that offers exposure throughout the sector. RING offers a modest dividend yield of 0.50%.

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Paul Dykewicz meets with Jim Woods before COVID-19 to discuss new investment opportunities.

Other risk-off trades Woods likes are best-of-breed blue chip stocks such as Johnson & Johnson (NYSE:JNJ), Lowe’s (NYSE:LOW) and American Tower REIT (NYSE:AMT). Their dividends yields are 2.71% for JNJ, 1.54% for LOW and 1.71% for AMT.

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Top Dividend-Paying Stocks to Buy Offer Some Protection If COVID-19 Woes Persist

 “Each of these stocks are recommendations in my Intelligence Report service, and each has handily bested the market in this very tumultuous, COVID-19 year,” said Woods. He also teams up with Skousen on the Fast Money Alert trading service that just notched a 93%-plus gain for their subscribers by recommending electric vehicle manufacturer Tesla, Inc. (NASDAQ:TSLA).

Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19.

Bob Carlson, leader of the Retirement Watch advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, told me his first recommendation in a “risk-off” market shift would be  gold with an investment in iShares Gold Trust (IAU).

“The Federal Reserve has reacted to the downturn with historic monetary stimulus, and it will continue to do that for some time,” Carlson told me.  However, IAU does not pay a dividend.

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“The monetary stimulus reduces confidence in currencies and also might push inflation higher,” Carlson said. “This should be good for gold. If stock markets decline because of an economic downturn, that should also drive more investors into gold.”

As a non-gold recommendation, Carlson said he favors preferred securities.

“They should benefit from declining interest rates and a flight to safety that would accompany a risk-off period,” Carlson said. “I recommend Cohen & Steers Preferred Securities & Income (CPXCX). It is an open-end mutual fund that offers a yield higher than corporate bonds. The dividends should be safe in an economic downturn.”

Preferred security dividends also frequently have tax advantages, so that it increases the after-tax yield, Carlson continued.

Investment Radio Host Kramer Offers Three of Top Dividend-Paying Stocks to Buy in a Risk-Off Climate

To become an effective strategy, “risk off” investing must be more than a short-term play, said Hilary Kramer, host of a national radio program called “Millionaire Maker.”

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services included 2-Day TraderIPO Edge, Turbo Trader, High Octane Tradeand Inner Circle.

 “If you truly believe that the coming market storms are going to be more intense than you’re willing to tolerate, you need to eliminate some risk from your portfolio and keep it off,” advised Kramer, who leads the Value Authority and GameChangers advisory services. “

However, for those willing to take a “random walk” down Wall Street until the rebound really revs up, there’s no reason to take “risk off,” Kramer said. The Fed has made sure that there is plenty of cash to cushion the consequences in the short term, she added.

“If you need to take risk off, park your money in investments that will generate significant income until you’re in a position to feel confident again,” Kramer counseled. “I wouldn’t head to Treasury debt here. You need to go out to 20-year bonds just to earn 1% right now and any inflationary shock will be painful. Use dividend stocks as bond replacements and do your best to lock in at least 2% or 3%.”

One of her top choices is Genuine Parts (NYSE:GPC), which pays a 3.7% dividend yield right now and is unlikely to suspend that payout for the foreseeable future. GPC offers a current dividend yield of 3.56%.

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Kramer Also Likes a Utility and an Insurance Stock that Pay Dividends

“There are also still income opportunities in utilities and the financials,” Kramer said. For example, Public Service Enterprise Group (NYSE:PEG) pays 3.70% and Old Republic International (NYSE:ORI) offers a yield of 4.94%, Kramer added.

“If sentiment around the market in general deteriorates, money will flow toward stocks like these and you’ll be grateful to have locked in the income.”

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However, Kramer said she suspects “wide swathes of the economy” will recover from the vestiges of the COVID-19 jolt in the next several months. If so, it does not quite reflect a risk-off scenario, if all the governors around the country cooperate and people follow the public health guidelines to reduce the risk of COVID-19 infections.

But investors still have a chance to gain growth at a reasonable price before the market starts a sustained rise later this year, Kramer said. Valuation multiples across the market have expanded but a few companies are still cheap relative to projected growth.

“Advanced Micro Devices (NYSE:AMD) justifies a 56X earnings multiple with a 60% earnings growth rate,” Kramer said. “Don’t rule out the bright spots outside the tech sector: Dollar General (NYSE:DG) only looks rich at 22X earnings until you consider that the bottom line is still on track to climb 31% this year. That’s what the market as a whole is worth right now and we’re looking for earnings on the S&P 500 to drop 25%. Given the choice, DG has an obvious appeal.”

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AMD does not pay a dividend, but DG yields 0.76%. The latter stock’s potential for capital appreciation and income could interest investors who like both growth and dividends.

Income-Sleuth Bryan Perry Picks His Top Dividend-Paying Stocks to Buy If ‘Risk-Off’ Sentiment Returns

When it comes to risk-off trades, it becomes “very simple, very fast,” said Bryan Perry, who heads the Cash Machine, Premium Income, Quick Income Trader, Hi-Tech Trader and Breakout Profits Alert advisory services.

.“Everyone has to eat, and when the budget is being squeezed, people eat at home,” Perry told me.

There are three top dividend-paying stocks that pay attractive dividend yields and are worth accumulating if investors expect the investing landscape to transition into a highly defensive one, Perry said. The stocks he likes the best for this type of situation, and their respective dividend yields, are Kraft Heinz Co. (NASDAQ:KHC), 4.65%, General Mills (NYSE:GIS), 3.03%, and Conagra Brands Inc. (NYSE:CAG), 2.32%.

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As three of the most diversified providers of branded household products that are familiar to almost all U.S. consumers, when the going gets tough for the market, investors rotate into the kitchen and bathroom stocks, Perry counseled. A full pantry of iconic-branded foods and brands is available for purchase, he added.

Kraft Heinz Co., for example, is a current recommendation in the Safe Haven portfolio that Perry features in his Cash Machine investment newsletter.

Paul Dykewicz interviews investment guru Bryan Perry at the Orlando MoneyShow.

Bank of America Research Cautions of a Possible ‘Risk-Move’ Shift

Research from Bank of America indicated that the economic situation now has more similarities than differences with the financial crisis of 2008 and “risk-off” trading could cause a market dip later in 2020.

A comparison with 2008 shows similarities between then and now, despite many differences. Bank of America offers these key points:

(1) policy responses are proportional to the size of the growth shock, and aggressive policies are put in place only because the economic cost is severe; and

(2) risk appetite is worth monitoring. Market turning points coincide with a bottoming of consumer and business confidence.

The investment bank added that the market currently is focused on COVID-19 case counts, and not reacting to weaker economic data. The market is not pricing in the continued activity and sentiment shock after the COVID-19 curve apex.

Just as in 2008, Bank of America predicted the market eventually will come to terms with longer-term economic costs. A sustained risk-off move would push yields down even further, according to the report.

The fallout of COVID-19 has led to 14,049,207 cases and 600,751 deaths globally, along with 3,641,417 cases and 139,175 lives lost in the United States, as of July 17. America has more than double as many cases and deaths of any other nation, including China, where COVID-19 originated.

Gov. Gavin Newsom of California is the latest among his peers to put the brakes on economic reopening and keep places such as health clubs, bars and restaurants closed, even when wearing masks and proper social distancing could be alternative ways to avoid COVID-19 infections. If some of the expected positive moves in the economy, job growth and federal stimulus fail to occur, as investors expect, a shift to risk-off assets could take place and spur asset-preservation strategies.


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Paul Dykewicz

Paul Dykewicz,, is a respected, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at and He also serves as editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other investment reports.

Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. In addition, Paul serves as a commentator about investing, economics, business news, politics and motivational guidance. 

Paul earned a master’s degree in business administration with a focus on finance at Baltimore’s Johns Hopkins University, where he was elected to two terms as president of its Finance Club. He earlier received a master’s degree from Michigan State University’s School of Journalism, where he was inducted into the Kappa Tau Alpha honor society. Paul received a bachelor’s degree from the University of Michigan in Ann Arbor, focusing on political science, business and economics.

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