7 Stocks to Beat the Market's Wild Swings

A time-honored strategy for conservative investors is to focus on stocks with high dividend yields and a history of dividend increases. "Companies that consistently grow their dividends tend to be high-quality companies with the potential to withstand market turmoil, and they can still deliver strong risk-adjusted returns over time," according to ETF provider ProShares, as quoted by Barron's. Pivoting towards a dividend-centric approach thus may be an obvious way for investors to play defense as the prospects for future capital gains diminish.

Barron's found 53 stocks in the S&P 500 Index (SPX) that have increased their dividends in each of the last 25 years. Among the highest-yielding stocks in that group are: Kimberly-Clark Corp. (KMB), 3M Co. (MMM), Consolidated Edison Inc. (ED), Cardinal Health Inc. (CAH), Leggett & Platt Inc. (LEG), PepsiCo Inc. (PEP) and Federal Realty Investment Trust (FRT). Kimberly-Clark has hiked payouts in 45 straight years, while both 3M and Federal Realty have done so in at least 50 consecutive years.

Recent Performance

Here are the dividend yields and year-to-date share price moves for these seven stocks, as of the close on May 17, per Barron's stock quote pages:

  Yield YTD Gain
Kimberly-Clark 3.8% (13.1%)
3M 2.7% (14.9%)
Con Ed 3.9% (13.0%)
Cardinal Health 3.5% (11.3%)
Leggett & Platt 3.6% (12.3%)
PepsiCo 3.8% (18.3%)
Federal Realty 3.5% (14.0%)

By comparison, the yield on the S&P 500 is 1.8%, per multpl.com. The index is up by 1.7% YTD.

Cautionary Note

Looking for dividend yield alone has its pitfalls, Barron's warns, since a high yield may reflect a troubled company with a beaten-down share price. Indeed, all the stocks in the table have suffered significant price declines in 2018. Nonetheless, as ProShares suggests in the quote above, a long, consistent history of dividend increases is an indicator of company that has exhibited financial strength over the long pull. Barron's observes: "There's at least the potential for handsome rebounds, because these companies are generally solid competitors with proven records."

Con Ed

Con Ed is the electric and gas utility serving the City of New York and its northern suburbs in Westchester County. Utility stocks are often used as close substitutes for bonds, and thus their prices are very sensitive to interest rates, with rising rates producing price declines. On the other hand, the prospect of dividend increases means that utilities offer the prospect of yields that increase over time relative to the investor's purchase price, an attractive feature relative to bonds. Electric and gas utilities' status as monopolies offering essential services under rate of return regulation theoretically limits the downside potential. (For more, see also: Top 5 Recession Stocks.)


The consumer staples company is best known for its line of paper products marketed under brand names such as Scott, Kleenex, Cottonelle and Viva. Its personal hygiene brands include Huggies, Pull-Ups, Kotex, Depend and Poise, among others. Recent revenue growth has been constrained by intense competition, Barron's notes, yet organic sales growth was 2% in the first quarter, beating analysts' estimates.

Federal Realty

The shares of REITs, like those of utilities, also have a strong negative correlation with interest rates. The company focuses on developing high-end shopping centers, while traditional brick-and-mortar merchandising is under increasing attack by online competition. More generally, billionaire investor Sam Zell is among those who see massive overbuilding and overpricing in real estate. (For more, see also: Why You Should Avoid Stocks: Billionaire Sam Zell.)

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