As October unfolds, investors are advised to remain optimistic, particularly toward dividend-paying stocks. Bespoke Investment Group has identified a traditionally lucrative season in this sector, as it reports that October heralds one of the most prosperous times of the year for stock performance, particularly over the subsequent three months. Deep seasonal patterns have been evident, especially for dividend stocks which, over the last decade, have demonstrated remarkable resilience and growth in the fourth quarter.
Investors often anticipate upward trends during the last quarter of the fiscal year. Historical data suggests that this period usually rewards investors abundantly, with many S&P 500 dividend-paying stocks showing an average fourth-quarter increase exceeding 11.5% over the past decade. Therefore, as one of the strongest periods for market returns approaches, a focus on these reliable income generators could provide fruitful opportunities. Investors recognizing this seasonal trend can potentially enhance their portfolios by strategically investing in these stocks.
Among the notable stocks highlighted by Bespoke Investment Group is Tapestry, the parent company of iconic brands like Coach New York. Tapestry has historically achieved an impressive average increase of over 17% during the fourth quarter. Its robust performance can be attributed to innovative product launches that resonate with consumers, especially the revived Tabby handbag line which hearkens back to the brand’s strong 1970s designs. The company has shown promise in 2024 with a year-to-date total return of approximately 28.3%, along with a dividend yield of around 3%. Analysts, including those from JPMorgan, have labeled Tapestry as a high-potential investment, indicating favorable conditions for sustained momentum.
KeyCorp also stands out in this favorable dividend landscape as it has posted solid performance trends. With an impressive average fourth-quarter gain nearing 15%, it warrants attention from cautious yet strategic investors. As of now, the bank has achieved a total return of over 21% for the year and boasts a dividend yield close to 5%. Analysts like Piper Sandler’s R. Scott Siefers have expressed confidence in the bank’s growth trajectory, projecting that net interest income will continue to expand. Even while Siefers adjusted his earnings expectations slightly downwards, his optimism regarding KeyCorp’s upcoming third-quarter report suggests that the bank remains a wise choice for income-seeking investors.
Another name worth considering is BlackRock. The asset management titan has averaged close to a 14% gain in the fourth quarter over the past decade, with a modest yet reliable dividend yield of 2.2%. Amidst volatile market conditions, Wells Fargo has initiated a positive outlook on BlackRock, underlining its sustained performance within the asset management sector. With predictions of a shift toward longer-duration fixed income investments due to impending Federal Reserve rate cuts, analysts expect BlackRock to benefit significantly from this trend in 2025. The potential for fixed income flows suggests a solid foundation for BlackRock’s growth, allowing income investors additional reasons to include it on their watchlists.
As October advances and the financial landscape shifts, dividend-paying stocks emerge as a beacon of hope for investors hungry for returns. The confluence of favorable seasonality, coupled with the potential effects of interest rate cuts on income investment attractiveness, suggests a promising future for carefully selected dividend stocks. Tapestry, KeyCorp, and BlackRock exemplify pivotal opportunities in the market, making them worthy considerations for those looking to capitalize on a historically fruitful period. With careful analysis and strategic positioning, investors could see substantial rewards as they navigate the tail end of 2024. The key is to remain vigilant and informed, harnessing the advantages that this time of year brings in the stock market.