Ugly September Has Arrived -- Here's Your Selloff-Protected Strategy

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The S&P 500 hates September. 

We know that. So what do investors do if the treasury market doesn't exactly provide good yield (the 10 year treasury yields no more than 1.58% at present). Go to cash? There are attractive and low-volatility dividend stocks out there than provide premium yield over treasuries, and dividend stocks are an area of the U.S. market which Mike Loewengart, vp of investment strategy at E*Trade, recommends. 

For the immediate, "Since 1950, September has been the worst month for the S&P 500 Index, which has dropped an average of 0.5% during the month," wrote LPL Financial's Senior Market Strategist Ryan Detrick in a Friday note." And recently, slowing manufacturing activity and falling business confidence, spurred by the threat of additional tariffs on Chinese goods put on by the White House in December, is outweighing the benefit of potentially two Federal Reserve interest rate cuts, according to many strategists. 

But "you can position yourself in segments of the equity market towards higher yielding, dividend paying stocks," Loewengart said. He, and other strategists and advisers, have agreed in the past several weeks that telecom and energy are two particular sectors with companies that offer fat dividends, with telecom being the safer sector in relation to one's principal. 

AT&T (T) - Get AT&T Inc. Report yields more than 5% currently. Verizon (VZ) - Get Verizon Communications Inc. Report yields more than 4%. Oil stocks, which are more prone to volatility, have significantly underperformed the broader market in 2019, and their dividends payments are attractive, in the eyes of many right now. BP oil (BP) - Get BP p.l.c. Sponsored ADR Report pays 6.5% currently. Chevron (CVX) - Get Chevron Corporation Report pays 4%. 

BP is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells BP? Learn more now.

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