Most Wall Street investors think the market would remain dead in the water for the rest of the year. As a result of this, they believe it’s the right time to purchase dividend-paying stocks, as per the most recent CNBC Delivering Alpha investor survey.
The business news outlet polled around 500 people including chief investments officers, portfolio managers, equity strategists, and their own contributors who manage money. They were asked about their stance on the market for the rest of the year.
The respondents were asked “what are you most likely to buy now?” and 42% answered that they would buy stocks paying high dividends. Meanwhile, 18% answered that they would purchase megacap tech stocks.
Dividend Stocks Currently the Safest Bet
Dividend stocks usually don’t have dramatic price appreciation, unlike growth stocks. However, they give investors a stable source of income when times are uncertain. A dividend is a part of a company’s earnings that are given out to shareholders.
The U.S. market has experienced a tumultuous year. The S&P is on track to end its worst first half in over 50 years. Many investors are afraid that the Fed will continue to aggressively increase rates in an attempt to curb inflation but also risk the possibility of an economic downturn. The equity benchmark has entered into a bear market, down by over 20% from its record high, which was reached at the beginning of January.
Additionally, 40% of the poll respondents think the S&P 500 could finish the year over 4,000, representing a ^% gain from the intraday level on Thursday, which was around 3,767, but still under where it started in 2022, at 4,766. Meanwhile, only 5% believe the index could go beyond 5,00 at the end of the year.
Several notable investors, such as David Einhorn, Leon Cooperman, and Stanley Druckenmiller, have remained skeptical that the Fed will become successful in engineering a “soft landing” in which growth slows down but doesn’t contract.
Druckenmiller believes the bear market has a ways to run. On the other hand, Cooperman predicts the S&P 500 to tumble 40% from its peak to trough. He also foresees a recession next year.
When the investor respondents were asked what is the current safest play, around 50% said cash, 15% said real estate, and 13% said Treasuries.