Between May and October of 2011, the Dow was submerged in a 2,400 point market rout. Overwhelmed by European fireworks and with questions arising as to the United States' own financial footing, the summer sell off became nothing short of gruesome. With the Dow off 1,200 points from its May 1st high and with all economic numbers pointing toward a similar onslaught this time around, investors should strive to position themselves in stocks best capable of weathering the brunt of the storm.
This is especially true since this summer may even prove slightly worse than that of 2011. After all, the chances of Greece being dropped by the EU are higher now than ever which is sure to inevitably create market chaos. Also, the potential tax increases set to rattle markets await in now just over six months. The $494 billion of looming tax increases will soon take away the shine of owning high dividend payers and also threatens to leave many companies reducing or even eliminating their dividend payout. A move that would become almost forced as the tax on dividends alone is being called upon by President Obama to balloon to 45%.
With that said, taking advantage of the high dividend payers may prove the best move for your portfolio in the coming months. For one, stocks with escalated dividend rates tend to hold up better in times of market uncertainty and it would be pure common sense to take advantage of the last year of minimal tax rates. If the security of these big payers is intriguing, below are three names to take a look at.
- Strayer Education (STRA): Despite the pressure on for-profit schools to show results and prove their worth the money, Strayer has retained decent earnings in the face of the cloudy overhead. In fact, the solid first quarter beat lifted shares 14% in late April. That $4 annual dividend also isn't too shabby.
- Nucor (NUE): There's no doubt steel shares have succumbed to quite a beating over recent weeks amidst European fears and a slowdown in China. Still Nucor, which has raised its dividend for 39 straight years, has fared much better than the rest. While AK Steel (AKS) and U.S. Steel (X) succumb to new 52 week lows, Nucor still remains over 15% off its October lows and has proven much less volatile on a day-to-day basis.
- Wal-Mart (WMT): The $1.59 annual dividend and 2.41% yield may not appear astounding, but Wal-Mart adds even more security as far as share price than other dividend payers. Being able to clear $60 for the first time since 2000, shares are within reach of all-time highs. Also, with citizens in dire need of saving money for whatever comes their way in 2013 as far as taxes, Wal-Mart's low prices have never looked so appealing.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.