What’s crazier: the stock market or Miley Cyrus' attire at the MTV Video Awards?

I’d definitely vote for the stock market!

All of August has been a roller-coaster ride for investors. The broad U.S. stock market — thanks to China’s sluggish growth and the confused outlook for U.S. interest rates —  experienced the first 10% drop in four years leading up to the most dismal monthly performance since May 2012.

Volatility was high. Just last Monday, the Dow Jones Industrial Average plunged 1,000 points followed by a more than 600-point rally a few days later.

September turned the pages on our calendars but hasn't yet turned our frowns around.

The Dow entered the new month with a 470-point plunge on Tuesday only to be followed by a triple-digit rebound on Wednesday.

So, yes. It does look as if the tremendous volatility is here to stay for a while. And, to top it off, September has historically been the worst month for market performance.

According to data from the S&P Dow Jones Indices, the S&P 500 index has had an average decline of 1.03% in September for the past 87 years!

Though there is no precise reason behind the stock market's so-called “seasonality,” traders and investors do not take past trends lightly. So this September is likely to witness some more market volatility.

This September also comprises what could be one of the Federal Reserve's most awaited policy meetings since the bull market began in Mar 2009. The Fed could increase the short-term interest rates for the first time since 2006.

Low rates have been a key catalyst that triggered the stock price rise since the lows hit more than six years back. During this period, the U.S. stock market more than tripled in value in spite of one of the slowest post-recession recoveries ever.

So September is plagued with volatility, seasonal baggage and confusion over the Fed’s impending decision. Now that makes finding stocks to invest in particularly difficult.

Here is what investors can do.

Zacks to the Rescue

We know that the past month has been nothing short of a nightmare for investors. For some – those with a short timeframe or trading on margin – the market correction has been undesirable. However, for long-term investors, a correction is often a great opportunity to pick up high-quality, dividend-paying stocks on the cheap.

Selecting such a stock could be a daunting task as one must consider the past performance of the company as well as its prospects.

Don’t worry. Here is where Zacks comes to your rescue.

The choices could be narrowed down based upon a favorable Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) and promising value metrics (Value Score = ’A’ or ‘B’) using our new style score system. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 offer the best of both worlds.

Based upon the above criteria, we have selected four stocks that could be promising picks for the month of September. Not only do these stocks have a favorable Zacks Rank #1 but also a value score of ‘A’ but also have a dividend yield of greater than 3%.

Braskem S.A. (BAK - Snapshot Report)

Braskem is one of the biggest petrochemical operations in Latin America and among the five largest private companies in Brazil.

This stock offers a dividend yield of 4.62%. Over the past 60 days, the stock witnessed positive estimate revisions, which led the Zacks Consensus Estimate to climb 25.8% to its present level of $1.17 a share for the current year.

What’s more, this stock has a P/E of just 6.6, as against the industry P/E of 10.60.

Newtek Business Services Corp. (NEWT - Snapshot Report)

Newtek Capital, Inc. emerged when the businesses previously owned by BJB Holdings, Inc. and REXX Environmental Corporation were combined. It currently operates as a holding company for a network of partner companies in a collaborative and coordinated effort to develop successful businesses in a number of existing as well as emerging, technological business lines.

Newtek offers an attractive dividend yield of 5.1%. Apart from this, the stock has been witnessing positive estimate revisions over the past 60 days, which led the Zacks Consensus Estimate to climb 27.5% to its present level of $2.32 per share for the current year.

This stock has a P/E of 7.40, compared with the industry P/E of 9.40.

Arlington Asset Investment Corp. (AI - Snapshot Report)

Arlington Asset Investment is a principal investment firm that currently invests primarily in mortgage-related and other assets.

The company’s P/E of 2.78 is 407.2% times lower than the industry P/E of 14.10. Additionally, it offers a dividend yield as high as 21.57%.

The stock has been witnessing positive estimate revisions over the past 60 days, which led the Zacks Consensus Estimate to move 9.8% higher to $5.84 a share for the current year.

Ashford Hospitality Trust, Inc. (AHT - Snapshot Report)

Ashford Hospitality is a self-advised Maryland Corporation and real estate investment trust organized to pursue opportunities in the lodging industry.

With a dividend yield of 6.27%, the stock has been witnessing positive estimate revisions over the past 60 days, which led the Zacks Consensus Estimate to gain 9.3% to $1.41 a share for the current year.

What makes this stock more attractive is its P/E of 5.43, which is lower than the industry P/E of 10.30.

Looking Forward

September, no doubt, looks scary. Given the current scenario, you might even think that the end is near.

Guess what? It is not as bad as people are making it out to be.

In fact, this is the time to test your mettle, forge your fortitude in the face of market panic. Quality stocks with a high dividend-paying rate seem to be a safe bet right now, so stick to these.

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