The
U.S.
economy
is
flashing
a
sign
that’s
favorable
for
dividend
stocks,
according
to
Bank
of
America.
In
March,
the
firm’s
U.S.
Regime
Indicator
—
an
economic
metric
—
showed
the
largest
increase
since
July
2021,
after
it
moved
into
a
recovery
phase
in
February,
equity
and
quant
strategist
Savita
Subramanian
wrote
in
a
note
Wednesday.
In
this
environment,
investors
want
to
own
dividend
stocks
with
above-market
yields,
she
said.
“High
Div
Yield
has
led
88%
of
the
time
during
prior
Recoveries.
This
factor
remains
inexpensive
and
neglected
as
well
…
and
could
be
a
beneficiary
of
income
investors’
flows
if
the
Fed
begins
to
cut
rates,”
Subramanian
said.
When
it
comes
to
selecting
names,
look
for
companies
that
pay
out
above-market
yields
that
are
secure,
not
stretched,
Subramanian
wrote
in
her
note.
For
those
characteristics,
she
looks
to
quintile
two
of
the
Russell
1000
by
trailing
dividend
yield.
This
includes
the
second-highest
tranche
of
dividend
yielders
in
the
index.
Her
screen
guards
against
owning
distressed
companies
that
might
move
into
the
first
quintile,
the
highest
dividend
yield
group,
if
prices
fall
ahead
of
potential
dividend
cuts.
Here
are
some
of
the
names
on
Bank
of
America’s
list
for
April.
AES
and
Sempra
are
two
utility
names
that
made
the
cut,
yielding
4%
and
3.4%,
respectively.
In
general,
utilities
are
known
for
their
predictable
dividends.
While
they
have
lagged
the
overall
market
this
year,
there
have
been
some
gains
in
recent
months.
The
Utilities
Select
Sector
SPDR
Fund
(XLU)
has
gained
5%
so
far
this
year,
and
it’s
up
by
4.9%
in
the
past
month.
In
late
February,
Sempra
CEO
Jeffrey
Martin
told
CNBC’s
Jim
Cramer
that
the
company
increased
its
capital
plan
to
$48
billion
to
fund
initiatives,
such
as
grid
modernization.
“A
$48
billion
record
capital
plan
really
lays
out
a
roadmap
for
our
future
growth
and
should
support
rate-based
growth
at
our
utilities
at
between
9%
and
10%,”
he
said
on
”
Mad
Money
.”
Shares
of
Sempra
are
down
roughly
4%
so
far
this
year,
while
AES
has
shed
nearly
10%.
Several
energy
names
are
also
on
the
list,
including
APA
and
HF
Sinclair
.
APA
has
a
3.1%
dividend
yield,
while
HF
Sinclair
yields
3.5%.
In
January,
APA
announced
a
deal
to
acquire
Callon
Petroleum
in
a
$4.5
billion
all-stock
transaction
.
The
deal
adds
to
APA’s
“backbone”
in
the
U.S.’s
Permian
Basin,
APA
CEO
John
Christmann
said
in
an
interview
with
CNBC
in
February.
Shares
of
APA
have
lost
nearly
10%
year
to
date,
while
HF
Sinclair
is
up
about
3%
in
the
period.
Lastly,
Citigroup
was
among
the
financial
names
highlighted
by
Bank
of
America.
Citi
posted
a
first-quarter
revenue
beat
earlier
this
month,
in
part
due
to
better-than-expected
results
in
its
investment
banking
and
trading
divisions.
Shares
are
up
22%
so
far
this
year.