BMO: Buy these 15 top dividend stocks now to prepare for a strong market recovery through year's end

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  • The S&P 500 is struggling for direction and is swinging wildly as September begins.
  • BMO Capital Markets is still bullish on stocks and has a Street-high S&P 500 target.
  • Here are 15 income stocks to buy that BMO is bullish on right now.

Stocks entered the long Labor Day weekend on a knife’s edge. The S&P 500 ended last week at 3,924, nearly halfway between its mid-June low of 3,636 and its mid-August high of 4,305.

Fear of a rapidly deteriorating economy in the face of multi-decade-high inflation sent the index to its early-summer lows before two months of optimism took hold as investors bet that price surges had peaked and that the labor market’s strength meant a recession wasn’t inevitable.

Then half of the robust rally’s gains went up in smoke after the Federal Reserve acknowledged that raising interest rates quickly to bring down inflation would lead to higher unemployment.

But the recent weakness in markets hasn’t changed the convictions of Brian Belski, the chief investment strategist at BMO Capital Markets. His year-end S&P 500 price target of 4,800 is a Street-high and implies that the index will end the year slightly up after falling as much as 23%.

A month ago Belski made the bull case to Insider that the US economy will avoid a downturn because corporate earnings will remain resilient, as they did in Q2.

That latter stance is in direct opposition to Morgan Stanley’s investment chief Mike Wilson, who believes that earnings estimates are far too rosy right now. The answer won’t come until Q3, which doesn’t begin until mid-October.

15 dividend stocks to buy now

Until pivotal Q3 earnings are revealed, investors can prepare for market volatility by betting on dividend-paying stocks. Steady quarterly income can serve as a hedge against inflation and market downside in what’s been the worst year for traditional 60-40 portfolios (60% stocks, 40% bonds) since 1936, according to a September 1 note from Bank of America.

In a September 1 note of its own, BMO Capital Markets strategists unveiled their monthly list of 15 North American stocks to buy for income. There was only one change from the prior month: Scotiabank (BNS) was swapped out in favor of National Bank of Canada (OTC:NTIOF).

This list of dividend standouts has a strong track record. It has outperformed its benchmark — the S&P/TSX Composite Dividend Aristocrats Index — by 4.8% this year, including a beat of 1.6% in August. It also topped the benchmark by 3.4% in the past 10 years and 2.1% since its inception in January 2002.

BMO Capital Markets

Besides refreshing its list of income-oriented stocks, BMO also shared updated versions of its US large cap and small cap lists (15 of each), which Insider covered last month. Only one of the 30 names on those two September lists was new: Constellation Brands (STZ), which took the place of Centene (CNC) in the large caps list.

Below are the 15 income stocks that BMO Capital Markets highlighted for September, along with the ticker, market capitalization, price-to-earnings (P/E) ratio, and dividend yield for each.