4 Value Stocks With Solid Dividend Yield To Buy In 2020

The benchmark S&P 500 Index has recorded an unprecedented Bull Market rally since Mar 9, 2009 – the longest stint in history. The equity market has returned about 376.6% (as of Dec 23, 2019) to investors during this tenure, putting it just behind nearly 417% return recorded during the Bull Run of the1990s.

Mixed Bag

However, the dream run witnessed some of the scariest drops and intense market volatility in recent memories due to the European sovereign debt crisis and the Sino-U.S. trade war. In addition to the whimsical equity market performance, mixed economic data at certain times have also been misleading as it lacked clarity on the broader economic picture. Global macroeconomic uncertainty and volatile oil prices have added to the cacophony.

However, the “Phase One” deal between the United States and China put the market back on growth trajectory, with the partial trade accord representing a major breakthrough in the 21-month standoff between the world's two largest economies. In addition, the Federal Reserve’s decision to cut rates thrice this year – in July, September, and October – coupled with the central bank’s assertion of a robust labor market and strong economic activity soothed investor sentiments. Soaring job growth and a 50-year low unemployment rate have added to the optimism. Moreover, factory production is rebounding, domestic homebuilding market is taking off, while the increase in consumer spending suggests solid momentum for the overall economy.

Potential Saviors

Amid the vagaries of the broader equity market, a prudent investment decision would be to focus on value stocks that are perceived to be “bargains” or are undervalued. In value investing, investors tend to hold a stock until it meets its target price and sometimes even longer provided the company demonstrates continued profitability.

Added to the intrinsic value proposition of value stocks, a healthy dividend yield would satiate the appetite of risk-averse investors. The facts that these stocks have the potential to outperform the market, while also providing a decent dividend yield, have made them prized assets. With market volatility likely to stay, value stocks with healthy dividend yield appear to be a safe haven to brace the rout.

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