Updated from 4:15 p.m. ET to reflect Monday's market action, closing stock prices, added content on Exxon and Chevron.NEW YORK ( TheStreet) -- It's still an open question whether stocks are heading into an extended bear market or if the severe pullback this summer from the highs in late April is a just correction phase in a larger bullish pattern.
In an effort to answer that question, Stovall ran a screen to look for highly rated stocks with above-average dividend yields and reasonable valuations that tend to be less volatile than the broad market. "Looking at volatility from a different perspective, we see that within the S&P 500, the stocks that pay a dividend recorded less of an average YTD decline than those that paid no dividend," he says. "Also, dividend payers had a lower average beta and a higher average S&P Quality Ranking, implying that they showed a higher consistency of raising earnings and dividends in each of the past 10 years." The concept of beta uses regression analysis to quantify how a stock reacts to market volatility. A level of 1 indicates the stock tends to move in tandem with the broad market, above 1 is more volatile and below 1 is less. S&P's analysis also found that companies in the S&P 500 that pay a dividend have posted an average year-to-date decline of 3.8% on a total return basis vs. 7.4% for companies that don't pay one. To make the list, companies had to rank highly on S&P's proprietary STARS, Fair Value (at least 4 on a scale of 5 on both counts) and Quality Ranking (a minimum of A-) metrics. In discussing each, the concentration will be on beta and dividend yield.