Time to Rotate to High Yielding Services Stocks

Recently, we argued that defensive investing with high dividend yielding Industrials may be a better strategy for the near future. Although defensive investing in some sectors doesn’t usually bring in the best returns in bull markets, investing with a margin of safety can be highly valuable in down markets. The same strategy can be applied to other sectors, such as the Services sector. Since August, the risky services stocks with low dividend yields may have performed better than the defensive services stocks with high dividend yields. However, defensive stocks are generally safer and provide better protection in down markets. We believe investors should be cautious about the upcoming inflationary environment. Like Jim Rogers and Ray Dalio, we are concerned about the Fed’s inflationary monetary policy, and we think investors should pick defensive stocks with high dividend yields in order to protect themselves against inflation.... Read more