How to select stocks in a volatile U.S. stock market? Investment bank BMO recommends the dividend growth sector

Zhitong
2025.01.17 03:48
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BMO Capital Markets expects turbulence in the U.S. stock market in 2025 and recommends dividend growth sectors to help investors withstand market fluctuations. Despite an optimistic outlook for U.S. stocks this year, BMO believes investors are shifting towards traditional investment strategies. BMO's Chief Investment Strategist Brian Belski pointed out that dividend growth stocks demonstrate stable annualized returns during periods of increased volatility and anticipates that price fluctuations will increase in the coming months. BMO's target price for the S&P 500 index is 6,700 points

According to the Zhitong Finance APP, BMO Capital Markets expects turbulence in the U.S. stock market in 2025 and has released a list of dividend growth stocks, stating that these stocks can help investors withstand volatility.

The company stated on Wednesday that such stocks help mitigate losses while allowing investors to participate in market gains.

Although BMO is optimistic about the U.S. stock market this year, it believes that investors are shifting towards traditional investment strategies after a heightened focus on AI-centered developments. BMO Chief Investment Strategist Brian Belski noted in a report that this shift may bring challenges compared to the "easy" market gains of the past two years.

Meanwhile, U.S. Treasury yields have surged as stronger-than-expected economic data has weakened expectations for the Federal Reserve to continue significant rate cuts. Belski stated, "This has clearly raised the anxiety index for investors, especially considering valuation levels."

The strategist indicated that the dividend growth stocks he focuses on have historically shown stable annualized returns compared to the S&P 500 index during periods of rising volatility:

Belski stated, "Given the current market dynamics, we believe that price fluctuations will become more frequent in the coming months, requiring investors to be more disciplined and forward-looking." Currently, BMO's target price for the S&P 500 index is 6,700 points.

BMO's screening criteria include stocks that have not cut dividends in the past five years and have shown year-over-year per-share dividend growth above that of the S&P 500 index in the most recent year.

Here are the individual stocks and ratings covered by BMO:

AFLAC (AFL.US) - Not Rated

CF Industries Holdings (CF.US) - Outperform

CSX Transportation (CSX.US) - Outperform

Caterpillar (CAT.US) - Not Rated

Cincinnati Financial (CINF.US) - Outperform

Comcast (CMCSA.US) - Not Rated

Deere & Company (DE.US) - Market Perform

Dell (DELL.US) - Not Rated

Domino's Pizza (DPZ.US) - Outperform

eBay (EBAY.US) - Market Perform

FedEx (FDX.US) - Market Perform

Hartford Financial Services (HIG.US) - Market Perform

Hess (HES.US) - Outperform

Hewlett Packard Enterprise (HPE.US) - Not Rated

Kroger (KR.US) - Market Perform

Marathon Oil (MPC.US) - Outperform

Nordson (NDSN.US) - Not Rated

A.O. Smith (AOS.US) - Not Rated Steel Dynamics (STLD.US) - In line with the market

Tractor Supply (TSCO.US) - Not rated

Allegion (ALLE.US) - Not rated

Everest Group (EG.US) - Outperform the market

TE Connectivity (TEL.US) - Not rated

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