Market volatility ahead? Protect your wealth with 1 ETF, 1 Dividend King and 1 “Magnificent Seven” share

Market volatility ahead? Protect your wealth with 1 ETF, 1 Dividend King and 1 “Magnificent Seven” share

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You have many options to prepare for a potential stock market downturn without sacrificing your long-term financial goals.

On May 23, the Dow Jones, Nasdaq, and S&P 500 all hit record highs, with the Dow hitting the all-time milestone of 40,000 in its remarkable 125-year history.

The stock market has struggled over the past six years due to the US-China trade war, COVID-19 pandemic, election unpredictability, supply chain issues and inflation.

Walmart exceeded profit expectations on May 23 despite concerns about falling consumer spending. This shows that great retailers are still doing great things, even when customers are struggling with their capital.

Many problems have not yet been resolved, which is why many investors may look at current stock market conditions and think that something huge is about to happen. Long-term investors know that it is not prudent to try to time the market.

The main focus should be on companies with strong foundations that can withstand market volatility. Find out why, in a depressed market, to buy Microsoft Corp. (NASDAQ:MSFT), Coca Cola Co. (NYSE:KO), and the Vanguard ETF Value Index Fund (NYSE:VTV) might be careful.

Vanguard Value ETF

The Vanguard Value ETF is a great choice if you want to invest new capital without taking on too much risk. It highlights companies that are making substantial profits today rather than those that might do so in the future.

On the other hand, the “Magnificent Seven“seven of the best-performing growth companies in their respective industries are included in the Vanguard Growth ETF. None of the seven Magnificent Seven stocks are included in the Vanguard Value ETF. The fund’s portfolio includes prominent names such as Berkshire Hathaway, Broadcom, JPMorgan Chase, UnitedHealth and ExxonMobil receive the most attention.

The fund yields 2.5% and its P/E ratio is 18.3. These numbers indicate a substantial discount to the S&P 500’s P/E ratio of 27.5. Due to its meager 0.04% expense ratio, the fund is an excellent choice for investors, even those with a lot of money.

It is a reliable way to diversify by focusing on well-established and stable market sectors rather than fast-growing companies.

Coca-Cola

Investors looking for high dividend stocks should trust Coca-Cola, especially during market downturns. Its dividend is large and it has a reputation for making payments on time. Coca-Cola’s yield is 3.1% higher than the S&P 500’s 1.3% yield. The yield differential produces a significantly higher level of passive income.

The story continues

Being a conservative sector with little room for growth, Coca-Cola has not done as well as the market in recent times. Yet this reputable company is showing signs of a comeback with notable increases in sales and profits. Coca-Cola’s remarkable 62-year record of increasing dividends has earned it the title of Dividend King. A 5.4% increase announced in February resulted in a quarterly dividend per share of $0.485.

Given the nature of its business strategy, Coke will not outperform the broader market over time. Nonetheless, Coke has avoided serious mistakes and remains calm when given the opportunity. Its primary focus on soft drinks sets it apart from PepsiCo, which operates in the beverage and snack sectors.

It takes talent to achieve a certain level of mediocrity, and Coke has mastered it. Although now at an all-time high, the stock is reasonably priced with a P/E ratio of 25.4. This is an interesting and safe stock to consider including in your portfolio if you want to continue investing in the stock market and put capital preservation ahead of capital appreciation.

Microsoft

If you expect a stock market slowdown, Microsoft may seem strange. Currently, slightly below its all-time high, the stock is up 240% over the past five years.

Several factors can cause the stock market to decline. However, unclear information and slowing profit growth, which can sometimes even turn negative, often affect these factors. In times of economic downturn, it is better to focus on the performance of the company rather than the value of its shares.

Although Microsoft may not be the most economical of the Magnificent Seven, most people agree that it is in a strong position to grow its market share, even during a downturn. of the sector. Its strong balance sheet and varied business strategy are the cause.

Among the many high-margin business divisions through which Microsoft makes money are:

Microsoft Cloud, Azure, GitHub, and many other cloud services are among the many powerful components that make up Microsoft Intelligent Cloud.

• AI Products like LinkedIn, Office services, Microsoft Co-pilot subscriptions and dynamic business solutions can also be purchased.

• More Personal Computing includes the Windows operating system, Xbox gaming consoles, and original content from Activision Blizzard. It also provides search engines and news announcements, such as Microsoft Edge, Bing and Microsoft News.

Microsoft shines in various areas. Looking at the figures for the nine months ended March 31, revenue increased by 15.8% and operating profit increased by 26.8% for the nine months ended March 31, 2023.

Even in a stock market downturn, you should consider your risk tolerance before investing in ultra-safe stocks. Those who take the long view should be exposed to companies that can benefit from economic expansion.

Simply put, investing too conservatively can generate lower-than-expected returns because low-growth companies frequently outperform the S&P 500 during prolonged periods of market expansion.

It is wise to invest in and hold on to businesses that can survive a crisis, even if they suffer temporary losses during periods of market uncertainty.

Consider these high-yield alternatives

While these three options offer a mix of yield and stability, investors should also consider alternative investments that can offer high returns and diversification. Two such opportunities are EquityMultiple’s Ascent Income Fund and the Arrived Private Credit Fund.

THE Ascent Income Fund targets stable income from senior commercial real estate debt positions, offering a historic distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is an essential investment vehicle for income-focused investors. New investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000.

THE Private credit fund arrived simplifies investment in the short-term financing of real estate projects, by offering attractive returns guaranteed by quality residential real estate. With an annualized dividend target of 7-9%, quarterly liquidity and a diversified pool of real estate-backed loans, this fund is an excellent complement to stock investing.

This item Market volatility ahead? Protect your wealth with 1 ETF, 1 Dividend King and 1 “Magnificent Seven” share originally appeared on Benzinga.com

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