From multi-day series of losses to jumps at night, this year has been an exciting journey for the markets. For investors who want to tackle the unpredictability, CNBC PRO has screened for low-volatility stocks in the United States and beyond that have outperformed the shattered market. Shares ended lower last week as markets weighed in on the Federal Reserve’s decision to raise interest rates by 75 basis points – its biggest increase since 1994 – and signaled a similar increase could be expected in July. Meanwhile, several key economic data do not meet forecasts. The Dow Jones Industrial Average closed below 30,000 again after falling below that level on Thursday for the first time since January 2021. The S&P 500 fell 5.8% for the week, while the Nasdaq Composite ended the week with 4.8% lower. Given this instability – which is expected to continue, given the still uncertain macro landscape – investors looking to turn to safer bets could find solace in a portfolio of historically low-volatile stocks that also pay dividends. To identify these names, CNBC Pro uses data from FactSet to weed out MSCI World stocks that are more variable than the index. Other names have a 3-year historical beta of less than 1. “Beta” is a measure of stock volatility; a beta of 1 means that the volatility of the shares is equal to the market, while a beta below 1 means that the shares are less volatile than the market. CNBC Pro then checks for stocks that are up this year and pay a dividend of at least 2%. They are also estimated by the majority of analysts, with an average potential for an increase of at least 10% over the next 12 months, according to FactSet. Utilities Almost a quarter of the 19 names on the screen were utility shares. The sector has traditionally been seen as a safe haven during periods of market turmoil, given its stable, regulated profits, inflation-based contractual clauses and higher dividend yields compared to other sectors. The sector has grown by 1% this year – one of only two sectors in MSCI World that are in positive territory. In addition, it enjoys the highest dividend yield among the 10 main sectors in the index, according to FactSet. Japan’s Kansai Electric Power and Tokyo Gas were among the names of utilities that made the screen, with a historic beta of 0.3 and 0.2, respectively. Shares of Kansai Electric rose 18.1% this year, but analysts are pushing up more than 30%. In addition, it has a dividend yield of 3.9%. Meanwhile, Tokyo Gas has risen 29.8 percent this year, but analysts say it has risen more than 20 percent. Other utility shares that made the screen include Germany’s RWE and Exelon Corp. in the US Biopharma. A number of biopharmaceutical actions have appeared on the screen. The sector is considered relatively stable for investors when markets break down due to its ability to generate free cash flow and pay dividends. The British-Swedish pharmaceutical giant AstraZeneca has a historical beta of only 0.2 and pays a dividend yield of 2.5%. Shares have risen 17.1% since the beginning of the year, but analysts have a potential consensus of up 25.9%. Analysts are also giving Illinois-based biopharmaceutical company Abbvie a potential up of 33.7%. Shares rose a modest 2.3% this year and pay a dividend yield of 4.1%. French pharmaceutical giant Sanofi is also on the list. Shares have risen 7.5% this year, but analysts see an additional average increase of 12.4%. Custom brackets Many custom brackets also made the screen. The French supermarket chain Carrefour has the lowest historical beta in the lot – only 0.3. Shares have risen 11.4% this year, but analysts believe the shares can still see an increase of another 14.3%. It also pays a dividend of 3.4%. British American Tobacco is also on the list. Shares of the company rose 23.3% this year, but analysts covering the shares believe they may still rise 11.4%. The British tobacco company Imperial Brands also made the screen, with shares expected to have a potential up of 13.3%. Companies that produce or sell basic goods to consumers are seen as safe bets in times of instability, as demand for their products often remains stable even during an economic downturn. Financial and others The screen also included numerous financial stocks. Japanese insurance company Tokyo Marine has a historical beta of 0.8, a dividend yield of 4% and a potential up of 29%, according to FactSet. Other financial stocks that made the screen include the Canadian insurance company Intact Financial, the German stock exchange operator Deutsche Boerse and the Japanese MS & AD Insurance. The Canadian fertilizer company Nutrien is also on the list. Shares have a potential growth of 89.8%, according to FactSet. This is even after the shares rose 18.6% this year. Barclays analyst Benjamin M. Theurer described the company as “best-in-class” operator that will continue to generate steady profits from its retail business. Equities are also seen as hedging inflation. “We see a permanent supply and demand constraint after 2023, which portends good for the wider group, despite the recent superiority over major indices,” Theurer wrote in a June note. 1
Low volatility, global stocks that pay dividends beat the market
