Wall Street has been rattled by severe volatility in the last two weeks as the coronavirus outbreak is showing no signs of letting up. With market participants unable to estimate the extent and impact of the coronavirus outbreak have commenced, selling off risky assets like equities out of panic.

At this juncture, it will be prudent to invest in high dividend (more than 5%) paying stocks with a favorable Zacks Rank to cushion your portfolio from day-to-day market fluctuations.

Market Mayhem Continues  

Wall Street’s downward movement, which commenced in the last week of February, is persisting in the first week of March as well. In the first four trading days of this month, all three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — moved 3% or more in either direction every day. At present, all these indexes are in the negative territory year to date, with a loss of 8.5%, 6.4% and 2.6%, respectively.

Meanwhile, investors are aggressively shifting their funds from risky equities to safe-haven assets such as U.S. government bonds and precious metals like gold. As a result of massive fund shifting, prices of government bonds with different maturities have skyrocketed resulting in plunging yields. Moreover, gold prices have skyrocketed.

Preventive Measures Fail to Deliver

Several governments, central banks and global economic agencies have taken a slew of pre-emptive measures to minimize the impact of coronavirus on the economy and stock markets. However, markets are yet to stabilize and make northbound movement.

The Bank of Canada has lowered benchmark interest rate by half a percentage point to 1.25%. The Reserve Bank of Australia reduced cash rate by 25 basis-points to a new low of 0.5%. The Bank of Japan boosted investor confidence with announcement that it would provide "ample liquidity" to keep financial markets stable.

Moreover, the International Monetary Fund and the World Bank have decided to release $50 billion and $12 billion, respectively, as aid packages for coronavirus-affected countries in order to revive global economic growth.

In the United States, the Fed reduced the benchmark lending rate by 50 basis points and the Congress has decided to release around $8 billion emergency funds to fight the spread of the coronavirus domestically. The immediate response of investors to the surprise 50 basis point rate cut by the Fed two weeks before its scheduled meeting during Mar 17-18, was disappointing.

Market participants and several industry experts are looking for more rate cut immediately and expansion of quantitative easing (bond purchase) program.  As per CME Fed Watch, as of Mar 6, 100% probability is assigned for another 50 basis point cut in benchmark leading rate in March, while 33% is assigned for 75 basis point reduction. Moreover, 26% probability is assigned that the Fed fund rate will decline 1% by April.  

Our Top Picks

In order to cushion your portfolio, we have narrowed down our search to five high-yielding stocks with strong growth potential. Each of our picks carries a Zacks Rank #1 (Strong Buy).

The chart below shows the price performance of our five picks in the past three months.

Enviva Partners LP (EVA - Free Report) produces and supplies utility-grade wood pellets. It serves utilities and large-scale power generators in the U.K. and other European markets. It has a dividend yield of 7.16%. The company has expected earnings growth rate of 115% for the current year. The Zacks Consensus Estimate for the current year has improved 29% over the past 60 days.

Berry Corp. (BRY - Free Report) is engaged in the development and production of conventional oil reserves located in the western United States. It has a dividend yield of 7.82%. The company has expected earnings growth rate of 12.6% for the current year. The Zacks Consensus Estimate for the current year has improved 11.8% over the past 60 days.

AGNC Investment Corp. (AGNC - Free Report) is a real estate investment trust that focuses on leveraged investments in agency MBS. It has a dividend yield of 10.53%. The company has expected earnings growth rate of 4.6% for the current year. The Zacks Consensus Estimate for the current year has improved 8.7% over the past 60 days.

Costamare Inc. (CMRE - Free Report) operates as a containership owner chartering its vessels to liner companies. It has a dividend yield of 6.18%. The company has expected earnings growth rate of 15.4% for the current year. The Zacks Consensus Estimate for the current year has improved 12.9% over the past 60 days.

Lazard Ltd. (LAZ - Free Report) is one of the world’s major financial advisory and asset management firms. It has a dividend yield of 5.02%. The company has expected earnings growth rate of 14.9% for the current year. The Zacks Consensus Estimate for the current year has improved 5.9% over the past 60 days.