Play defense with these dividend-paying stocks, says Trivariate Research's Adam Parker

Investors looking to play defense may want to consider buying certain dividend stocks, according to Trivariate Research founder Adam Parker. Markets have been rocked by volatility this year. On Monday, the Dow Jones Industrial Average , S & P 500 and Nasdaq Composite all moved higher , after selling off on Friday amid concerns over Israel's airstrikes on Iran. While recent interactions with institutional investors signal that many think the S & P will continue to move higher, Parker and his team are also regularly asked about attractive defensive stocks, he said in a June 8 note. With the "old school" traditional playbook of defensive stocks like consumer staples, pharmaceuticals and telecoms is "broken," Trivariate Research has identified several ways investors can get defensive — including dividend-paying equities. "We think companies with consistent dividend growth are likely to provide strong defense if there's a growth scare," Parker wrote. "Specifically, our past work shows that companies that have grown their dividend over the last five years and that are indicated to have continued dividend growth, as well as at least 7% forecasted sales growth and 10% forecasted earnings growth outperform." Here are some of the names that Parker and his team say fit the bill. The screen does not include valuation since stocks that experience multiple contraction before corrections perform the worst during the corrections, he said. Microsoft , which once again became the world's largest company by market cap earlier this month, has a dividend yield of 0.70%. The tech giant managed to hit a record close of $467.68 on June 5 — on a day when tech stocks broadly dropped. Shares have climbed even higher since that time, closing at $478.87 on Thursday and hitting a 52-week high of $480.69 on Monday. MSFT YTD mountain Microsoft year to date Microsoft has an average analyst rating of buy and nearly 8% upside to the average price target, according to FactSet. The stock is up about 14% year to date. Eli Lilly is the only pharmaceutical name that made the cut. The company pays a 0.73% dividend yield and has gained 5% so far this year. In May, Eli Lilly reported an earnings and revenue beat for its first quarter, but it lowered its full-year profit guidance because of charges related to a cancer treatment deal. The company maintained its full-year sales guidance. CEO Dave Ricks told CNBC after the company's earnings report that the use case for its popular weight-loss and diabetes drugs is "massive." Mounjaro is Eli Lilly's diabetes treatment and Zepbound is its obesity drug. "Today we probably have about 10 million Americans taking GLP-1s. The market opportunity is much, much larger than that," Ricks said in an interview with " Squawk Box " on May 1. "We see this as a big wave of innovation for many years to come and Lilly is at the forefront of that." Eli Lilly has an average rating of overweight and nearly 21% upside to the average price target, per FactSet. Investors looking for a higher payout can turn to Philip Morris International , which yields 2.93%. The popularity of the tobacco giant's smoke-free products , notably its Zyn oral nicotine pouch, have helped push shares more than 50% higher this year. The company plans to ultimately replace cigarettes with smoke-free alternatives. The stock has an average analyst rating of overweight and 1.3% upside to the average price target, per FactSet. Meanwhile, utility companies are known for their dividends but NextEra Energy is the only name in the industry that made the list. The stock has a 3.03% yield and has gained about 3% year to date. NextEra shares have an average rating of overweight and 11% upside to the average price target. Lastly, Eaton is expected to benefit from the artificial-intelligence data center boom, as well as reshoring — when companies return operations to the United States. Yet providing power management solutions for data centers and manufacturing facilities is one segment of its business. It also has a hand in the aerospace industry, providing fuel, hydraulics, and pneumatic systems for commercial and military use. It is the latter business segment that is expected to benefit from the deal Eaton struck on Monday to acquire defense group Ultra PCS Limited from the Cobham Ultra Group for $1.55 billion. Ultra PCS produces products and aftermarket services for the aerospace market. Eaton has a 1.29% dividend yield and is up 2% year to date. The stock has an average rating of overweight and nearly 4% upside to the average price target, according to FactSet.

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Investors Set to Flock to Safety as World Awaits Iran's Response

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'The level that stock markets are standing at, they're definitely going to face increased risk, there's no doubt about that.' Market reaction has been muted since Israel's initial assault this month: Even after falling for the past two weeks, the S&P 500 is only about 3% below its all-time high from February. Investors expect the conflict to be be localized, with no wider impact on the global economy, said Evgenia Molotova, a senior investment manager at Pictet Asset Management. 'But it all depends on how the conflict develops and things seem to be changing by the hour,' she said. 'The only way they take it seriously is if the Strait of Hormuz gets blocked because that will affect oil access.' Iran has vowed to impose 'everlasting consequences' for the bombing and said it reserves all options to defend its sovereignty. Still, downside is likely to be limited because some market participants have been preparing for a worsening conflict. 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'Fundamental disruptions to the global supply of oil with a possible hit to shipments through the region would push oil prices a lot higher from here,' they said. Meanwhile, the dollar has risen about 0.9% since the conflict started. It's a relatively small move given the US currency's traditional role as a haven in times of turmoil. The US currency has been battered in recent months by Donald Trump's trade and fiscal policies. 'The biggest trade around at the moment is short dollar,' said Birrell. 'No one likes it. But traditionally it's the safe currency people go to, and it might just be that this turns around the fortunes of the dollar.' The reaction was less straightforward in the $29 trillion market for US Treasuries since the conflict began. Yields initially sank but the moves swiftly reversed over concern about a resurgence in inflation. US Treasuries are, overall, little changed since June 13, with the yield on 10-year notes rising since then by less than two basis points to close Friday at 4.38%. Following are comments from strategists and analysts on how they expect investors to respond on Monday: Emmanuel Cau, head of European equity strategy at Barclays Plc In the very near term, markets may be worried about Iran retaliation, and whether or not it blocks the Strait of Hormuz... Recent crises in the region have shown that the impact on equities from oil shocks tend to be short lived, and usually end up as medium-term buying opportunities. In fact, if the conflict results in bringing more stability and peace to the Middle East, it could be seen as bullish for risk assets over the medium term. Diego Fernandez, chief investment officer at A&G Banco in Madrid 'We expect some risk off, but not an aggressive one. The world may be a safer place without the Iranian nuclear threat, but we still need to see the Iranian reaction and how the conflict evolves.' Anthony Benichou, cross-asset sales at Liquidnet Alpha trading desk Trump couldn't afford for this to drag on. If oil stays elevated too long, especially heading into the midterms, it's a political headache. High gas prices hit Main Street, fuel inflation, and turn voters against you. So the move had to be fast, surgical, and decisive. Note how impressive the risk premium has stayed contained in oil — short-term vols have spiked, but there's been little spillover elsewhere. If Iran were to shut down (the Strait of Hormuz), they'd be cutting off their own main revenue lifeline — effectively speeding up their own collapse. Alfonso Benito, chief investment officer at Dunas Capital It is a very worrisome situation. Investors have some hours to digest the attack before the market opens Monday, and a lot will depend on what Iran does if it responds or not. Anyhow, it's not good. Manish Kabra, head of US equity strategy at Societe Generale SA Equities are likely to only see a shallow drop because central bank policies are much more accommodative than in previous oil shocks. There's also no euphoria in markets in terms of flows. It won't be like we had in 2022 when the S&P 500 and European stocks dropped 20%. Our take is that the Fed may actually ignore any potential oil shocks and that's why I still say there's a good possibility that the S&P 500 will make new highs this year. Anthi Tsouvali, strategist at UBS Global Wealth Management We're definitely in a higher-risk environment than we were on Friday. Markets will react, but probably still modestly in equity markets. We're for sure going to see oil going higher. Investors will also have to think about the impact of higher oil on inflation, and if that's the case, Europe is going to be hit harder than the US. Uncertainty has been very high this year and now this is another event that's added to it. So we'll see some volatility but right now, given the information we have, I don't see that it's going to be long lived. So far, we haven't seen bombings of energy facilities and the Strait of Hormuz hasn't closed. Markets will appreciate that. While there's going to be risk-off sentiment for sure, hopefully it's not going to be long lived or too deep. Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd. Up until now, the war was very much focused on the Middle East, but with the US's involvement this looks a lot more serious in nature and the risk is really spreading out in a very big way. In terms of markets, we'll definitely see the biggest impact in commodity markets and energy prices are likely to go even higher. We're also likely to see these tensions reverberate across equities. Markets are going to be pricing in a wide variety of possibilities about how Iran is going to escalate. The worst-case scenario would be Iran trying to close the Strait of Hormuz. The first impact would be seen in oil markets and then quickly resonate across stocks and bonds. From an equity market perspective, this is very much risk off. Charu Chanana, chief investment strategist at Saxo Markets in Singapore This marks a turning point for markets. While oil and gold are likely to surge on geopolitical risk, the bigger question is whether US assets can still command a safe-haven premium. Rising fiscal risks, institutional strain, and policy unpredictability could accelerate the fading of US exceptionalism. Trump's decision to bypass Congress adds to institutional concerns, likely putting upward pressure on US yields and questioning the credibility premium once attached to US assets. Beyond the immediate market reaction — higher oil, gold, and volatility — investors will be watching for a potential shutdown of the Strait of Hormuz or retaliation against US naval assets. These risks could drive oil sharply higher, add inflation uncertainty, and test the US dollar's safe-haven appeal amid rising concerns over fiscal dominance and institutional erosion. Shoki Omori, chief strategist at Mizuho Securities Co Capital will race toward classic refuges — Japan government bonds, the yen, Swiss franc and gold. Treasury yields would feel the downdraft almost immediately. History shows that when investors dump dollars, they often scoop up Treasuries, anticipating that the Federal Reserve will lean dovish to steady the ship. A measured statement could keep the greenback steady, but any rhetoric hinting at strikes on US soil or forces would likely jolt it downward. Dollar-yen could edge down to 144. Nick Twidale, chief analyst at AT Global Markets We're going to see a gap higher in gold, yen, Swiss franc and likely the dollar. Gold may shoot up to $3,400 very quickly but the key theme will be volatility — the moves might not stick if, for example, Trump decides the strikes are done. Trump has the bigger stick compared with Tehran, and as such his next move — be it a further escalation or heading back to the negotiating table — will matter more for markets. Gary Dugan, chief executive officer of The Global CIO Office We expect equities to react in a measured way, be it with some downside risk. Markets are not technically overextended with many trading within 3-5% of their 200-day moving averages. Unless we see a significant spike in oil prices we would expect equity markets to hang in around current levels. Nirgunan Tiruchelvam, an analyst at Aletheia Capital in Singapore There are 3 scenarios. A dramatic escalation in Mideast tension: This could see the Strait of Hormuz being blocked and a cycle of revenge. The second is an end to the hostilities in a similar manner that India-Pakistan ended last month. The third is the continuation of the low-intensity bombing by both sides. We expect risk assets to be under pressure under scenarios 1 and 3. Oil and other commodities will also rally under these scenarios. Jason Schenker, president of Prestige Economics The level of fear in global financial markets will hinge on the next wave of actions in and the potential duration of this conflict, and it may take days or weeks before the fog of war clears enough for traders to take outlier positions with significant conviction. As for bonds, the impacts of this conflict could be mixed. While the Fed would have less leeway to cut interest rates due to higher crude oil prices, money leaving equity markets may flood into bonds and Treasuries as safe havens, sending bond prices higher and bond yields lower. Viraj Patel, strategist at Vanda Research This weekend's US strikes are another reason for hedge funds and CTAs to rush towards the exit on their bearish USD bets. We believe one of the biggest pain trades this summer could be a grind higher in the USD as the reasons for being short USD fall by the wayside. There's a perfect storm brewing for non-US equities — especially crowded cyclical European and Asian markets. Rising geopolitical risks are another headwind for global growth on top of the ongoing slowdown in cross-border trade driven by Trump tariff policies (which certain equity markets seem to be ignoring). 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Options Traders Wrestle With Stocks' Muted Reaction to War Risk

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LinkedIn CEO says AI writing assistant is not as popular as expected

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