The financial market has been giving mixed signals, creating confusion among investors, even though this year’s year-to-date gains are better than the previous year’s bear. However, there are still various risk factors that remain concerning, including in the broader economy and the stock market. Christian Mueller-Glissman, head of asset allocation research for Goldman Sachs, recommends investors to take a more defensive posture in light of the elevated macro uncertainty, signs of market stress, and mixed macro momentum. He advises a shift to a low vol regime, adding that there is more value in equity protection strategies. One defensive play is dividend stocks, which can provide a solid source of passive income. Goldman Sachs analyst, Neil Mehta, has picked out two high-yield dividend stocks that may interest investors.
The first is Coterra Energy (CTRA), a Texas-based energy firm that produces crude oil, natural gas, and natural gas liquids from its net acreage holdings of more than 600,000 acres across three US states. Coterra Energy has an annualized base-plus-variable dividend that yields an impressive 9%, which the company supports with its free cash flow. The second dividend stock is Pioneer Natural Resources (PXD), a Texas-based operator in hydrocarbon exploration and production with a focus on the Permian Basin. It has a balanced and diversified asset base and a solid balance sheet with a commitment to capital returns. Mehta gives CTRA shares a Buy rating with a $29 target price, which suggests a 14% upside on the one-year time horizon, and PXD a Buy rating with a $258 target price, implying a 26% upside.
