When the major market averages begin to struggle, as we are experiencing in July, investors are often best served by looking for high dividend payers in defensive sectors. These are the types of stocks that tend to do well in a bearish market phase, and with a healthy dividend component, they can provide a decent income stream as well. AT & T (T) Our first candidate is from the old telecom group within the communication services sector.
While the largest names in this sector, such Alphabet and Meta Platforms have struggled in July, AT & T has managed to score a key breakout above price resistance. The breakout in late June pushed T above the February high around $18.20.
A subsequent pullback saw the price bounce off that breakout level, which also lined up with the 50-day moving average. Now we observe a clear pattern of higher highs and higher lows in a stock that pays about a 5.7% dividend yield, meaning investors are rewarded with both price gains as well as a fairly consistent dividend stream.
British American Tobacco PLC (BTI) U.S.-based tobacco companies such Altria and Philip Morris have already experienced significant price gains in 2024, so I'd be looking at a stock like BTI — which is potentially much earlier in a new uptrend.
And with a dividend yield over 8%, this means a strong income component to this play as well. British American spent the entirety of 2023 below a downward-sloping 200-day moving average. In April 2024, we saw BTI retest the December 2023 low.