Five 8% Yielding Blue-Chips For This Volatile Market

Market Overview - The VIX (S&P volatility index) has an average of 19.5 since its introduction in 1990, indicating an implied daily volatility of plus or minus 1.22% [2] - The S&P 500 and Nasdaq Composite experienced significant fluctuations in July and August 2024, with the S&P 500 down 2.4% and the Nasdaq Composite down 6.1% since July 1 [3] - Following a period of low volatility, stocks have seen a rapid increase, with the Nasdaq up 11% and the "Magnificent Seven" ETF up 12% during an eight-day winning streak [6] Earnings Growth Projections - The S&P 500 is expected to see a 10% EPS growth in 2024, driven by strong performance from big tech companies [11] - For 2025, EPS growth is projected to be as high as 21% in certain sectors, although Goldman Sachs is less optimistic, forecasting only 6% growth [12][13] Economic Indicators - The Conference Board's leading index has declined to its lowest level since 2016, indicating potential economic weakness [25] - Goldman Sachs anticipates a downward revision in payrolls for 2024, estimating a reduction of 600,000 to 1 million jobs [17] - Retail sales are performing well, suggesting that the economy is stronger than the two-year rolling average [19] Volatility and Market Recovery - Stocks have shown a remarkable recovery after a 9.7% decline, marked by the third-highest spike in volatility ever recorded [7] - Historically, following periods of intense volatility spikes, stocks tend to deliver exceptional returns, averaging a 40% increase within the following year [8] Valuation Insights - The S&P 500's cyclically-adjusted price-to-earnings ratio indicates that stocks have become pricier over the long term, raising concerns about potential overvaluation [27] - Despite high valuations, there are opportunities for value investors to find blue-chip stocks yielding 7% to 8% with strong fundamentals [29][40] Investment Opportunities - Five blue-chip companies are highlighted for their potential to deliver an 8% yield, with strong growth forecasts and low-risk profiles [36][40] - These companies are expected to provide a total return potential of 16% annually, significantly higher than the S&P 500's historical returns [40]