It appears more investors are eyeing dividend stocks ahead of the Federal Reserve’s interest rate decision in September.
Paul Baiocchi of SS&C ALPS Advisors thinks it is a sound strategy because he sees the Fed easing rates.
“Investors are moving back toward dividends out of money markets, out of fixed income, but also importantly toward leveraged companies that might be rewarded by a declining interest rate environment,” the chief ETF strategist told CNBC’s “ETF Edge” this week.
“Not only do you have price volatility, but you have fundamental volatility in those sectors,” Baiocchi said.
He explains this volatility would undermine the goal of the OUSA and OUSM, which is to provide drawdown avoidance.
“You’re looking for dividends as part of the methodology, but you’re looking at dividends that are durable, dividends that have been growing, that are well supported by fundamentals,” Baiocchi said.
Mike Akins, ETF Action’s founding partner, views OUSA and OUSM as defensive strategies because the stocks generally have clean balance sheets.
He also notes the dividend category in ETFs has been surging in popularity.
“I don’t have the crystal ball that explains why dividends are so in vogue,” Akins said. “I think people look at it as if you’re paying a dividend, and you have for years, there is a sense to viability to that company’s balance sheet.”
Check out the companies making headlines before the bell: Rigetti Computing , Quantum Computing , D-Wave Quantum — Stocks tied to quantum computing were surging in premarket trading, building on a strong year-end rally for the budding industry . Shares of Rigetti rose 27%, while D-Wave Quantum’s stock jumped 5% and Quantum Computing shares added almost 8%. KULR Technology Group — The stock added more than 11%. On Thursday, shares of the space technology company soared more than 40% after it said it bought 217.18 bitcoin worth about $21 million. The purchase was the company’s first since its announcement of a new bitcoin treasury initiative on Dec. 4, when bitcoin topped $100,000 for the first time. Honda — The automaker’s U.S.-listed shares continued to advance after Honda officially began merger talks with fellow Japanese automaker Nissan . The stock was up nearly 3% in early Friday trading and was last on pace for a 19% weekly gain. Toyota Motor — Shares rose more than 2%, extending the nearly 9% gain seen in the previous session. Earlier this week, Nikkei, citing an executive who asked not to be named, reported that the Japanese automaker is aiming to double its return on equity, or ROE, to 20% . MicroStrategy — Shares of the bitcoin proxy gained nearly 1% as the price of the cryptocurrency advanced above $96,000 on Friday. This comes a day after crypto markets were under pressure on Thursday. During that trading session, MicroStrategy fell 4.8%. GameStop — The stock fell nearly 2%, reversing the gains seen in the previous sessions. Shares of the video game retailer have been on a five-day winning streak and have surged more than 88% this year. Red Cat Holdings — Shares gained more than 3%, continuing a massive run this year. In 2024, the drone stock has gained nearly 1,424%. The stock has also risen about 14% month to date amid a broader rally in the category, as drone sightings across the Northeast spurred retail interest in the sector and the company partnered with Palantir . Amedisys , UnitedHealth — Shares of Amedisys rose more than 4%, while UnitedHealth was marginally lower after a filing revealed the companies entered into a new waiver agreement , extending the deadline for closing their $3.3 billion merger. The new deadline is 10 days after a final court decision is issued in the lawsuit or on Dec. 31, 2025, whichever is earlier. Netflix — The stock fell almost 1%. On Thursday, the National Football League said in a statement that nearly 65 million combined viewers watched the streaming giant’s NFL coverage, setting streaming records. According to the statement , the game between the Kansas City Chiefs and the Pittsburgh Steelers brought in an average of 24.1 million viewers, while the game between the Baltimore Ravens and the Houston Texans scored 24.3 million viewers. That makes them the most-streamed NFL games in U.S. history. — CNBC’s Jesse Pound and Lisa Kailai Han contributed reporting.
Check out the companies making headlines in midday trading: Rigetti Computing — The quantum computing stock soared 10%, adding to the sector’s robust end-of-year rally . Shares of Rigetti are now up 1,674% on the year. KULR Technology Group — Shares pulled back around 9%, reversing the gains seen in the previous session. On Thursday, the stock advanced more than 40% after the space technology company said it bought 217.18 bitcoin worth about $21 million. This was the company’s first purchase since it announced a new bitcoin treasury initiative on Dec. 4, when bitcoin passed the $100,000 level for the first time. Honda — The automaker added 1%, extending gains after announcing earlier this week that it officially began merger talks with fellow Japanese carmaker Nissan. That lifted Honda’s week-to-date gain to 20.7%, putting the stock on track to notch its best week since 1988. Amedisys , UnitedHealth — Shares of Amedisys rose about 5%, while UnitedHealth stock was fractionally lower after the companies entered into a new waiver agreement, a filing revealed. This new agreement extends the deadline to close their $3.3 billion merger. MicroStrategy — The cryptocurrency-linked stock slipped nearly 4%. It had previously traded higher early Friday morning as the price of bitcoin rose above $96,000. Red Cat Holdings — The drone stock plunged nearly 10%. It was previously trading higher on Friday morning, adding on to its massive year-to-date rally of 1,275%. Shares of Red Cat rose in December after drone sightings in the Northeast reignited Wall Street interest in the sector. South Korea stocks — U.S.-listed shares of South Korean stocks retreated on Friday after lawmakers impeached acting President Han Duck-soo , ousting the nation’s second head of state since a short-lived martial decree earlier this month. The iShares MSCI South Korea ETF (EWY) slid 1%. U.S.-listed shares of Korea Electric Power and Coupang shed 2%, while Posco Holdings and KT Corporation declined 1%. — CNBC’s Sean Conlon and Alex Harring contributed reporting.
Treasury yields were slightly higher early Friday after a mixed set of data on weekly jobless claims.
The yield on the benchmark 10-year Treasury was 3 basis points higher at 4.607%, slightly down from its peak earlier in the week but back above the 4.6% level it had not breached since May. The 2-year Treasury was fractionally higher at 4.334%.
One basis point is equal to 0.01%. Yields move inversely to prices.
After the Christmas break, jobless claims data released Thursday for the week ending Dec. 21 came in 1,000 lower at 219,000, below the 225,000 consensus forecast from Dow Jones.
However, continuing claims rose by 46,000 for the week ending Dec. 14 to the highest level since November 2021.
The 10-year Treasury yield has risen more than 40 basis points in December as traders anticipate a more hawkish Federal Reserve in 2025. The central bank next meets at the end of January, when a rate hold is expected.
Monthly data on wholesale inventories is due Friday.