Stocks mentioned: Verizon (VZ) trades at 11.8x trailing P/E with a dividend yield approaching 6% and a low beta of 0.27 offering downside protection during geopolitical volatility, while Exxon Mobil (XOM) fell over 4% as oil dipped below $100 per barrel but offers a 2.5% yield and serves as a hedge against future oil price spikes amid Strait of Hormuz uncertainty.
The U.S.-Iran ceasefire remains fragile with potential closure of the Strait of Hormuz and Iran reportedly considering tolls on ships, creating persistent oil price volatility that could shift from the $100+ levels currently feared.
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The markets might be breathing a sigh of relief after the two-week U.S.-Iran ceasefire agreement, but that doesn’t mean it’s time to let our guards down, especially since things are off to a turbulent start following Israel’s attack on Lebanon. Undoubtedly, the more than 1,300-point gain enjoyed by the Dow Jones Industrial Average could easily be given back if the Strait of Hormuz stays closed and we don’t gain clarity into what happens next. With Iran reportedly looking into setting a “toll booth” for ships moving through, let’s just say that things are complicated in the early days of the ceasefire.
In any case, investors should be prepared to hang in there as geopolitical uncertainties stay on the high end. And given oil can jump several dollars in any given day, the days of $100 oil (or higher) might not be over with quite yet. Once the Strait finally does open for business again, another several dollars could be wiped off the oil price, but until then, investors might wish to consider battening down the hatches, especially if the Iran crisis has hit one’s portfolio extra hard.
So, what’s a good place to get paid dividends while experiencing less day-to-day market choppiness?
READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks
Verizon (NYSE:VZ) looks like a tempting buy on the dip while the yield inches closer to 6% again. The telecom titan, which clocked in one of its best quarters in a while, is now in the process of rolling over. The stock is off more than 6% from its peak and might be at risk of a further plunge as investors look to rotate back into the risk-on plays again.
While the technical picture doesn’t look great, the beta, currently at 0.27, could make the stock a great safe haven from the geopolitical storm. As the telecom looks to follow up with another strong quarter while continuing to raise the bar on the dividend, I’d not look away from the play now that CEO Dan Schulman has seemingly found a way to turn the tide.
