Steven Cress Reveals Top 6: Dividend Income and AI Growth Stocks

In a recent discussion, Steve Cress, head of Quant at El-Balad, shared insights on navigating market volatility using a barbell approach. This strategy combines dividend income stocks with artificial intelligence (AI) growth stocks, aiming to provide stability and growth amidst uncertainty.

Dividend Income Stocks to Consider

Cress highlighted three notable dividend stocks worth exploring:

• Merck (MRK): This pharmaceutical giant has a market cap of $230 billion, a strong buy rating, and ranks highly in both the healthcare and pharmaceutical sectors. Merck boasts a 3.36% dividend yield, alongside a remarkable 40% return on equity and a low forward P/E ratio of 10.4.
• Alpine Income Property Trust (PINE): With a market cap of $252 million, this diversified real estate investment trust (REIT) ranks ninth out of 172 REITs. It offers a forward yield of 6.94% and currently has a 99% occupancy rate across its 128 commercial properties.
• OneMain Holdings (OMF): This financial services company, valued at $6.7 billion, specializes in personal loans for non-prime consumers. OMF provides a substantial 7.36% dividend yield and ranks three out of 38 in its industry.

AI Growth Stocks to Watch

Cress also identified three AI stocks that investors should monitor:

• Micron Technology (MU): A major player in the semiconductor industry with a market cap of $271 billion, Micron has seen its valuation improve significantly in recent months. The stock is up 168% year to date and features strong growth metrics.
• CommScope Holdings (COMM): This company focuses on infrastructure solutions for data centers, supporting AI technologies. With a market cap of $3.69 billion, it has demonstrated strong profitability and impressive stock performance.
• Celestica (CLS): Despite a high valuation grade of D+, Celestica has shown growth in profitability, driven by strong demand from AI and technology sectors. It ranks 6 out of 537 in information technology, showcasing its prominent market positioning.

Market Insights and Strategy

The broader market remains in a state of uncertainty, largely influenced by inflation concerns and interest rate discussions. Recent analysis shows a significant rotation towards safer sectors, with energy and defensive stocks performing better amidst volatility.

In summary, utilizing a barbell strategy that combines high-dividend income stocks and growth-oriented AI stocks may offer a balanced approach for investors navigating today’s complex market landscape. This method allows for both stability and growth potential, aligning with prudent investment principles.

Cress emphasized the importance of maintaining a diversified portfolio, stating that this approach can build wealth over time, regardless of market fluctuations.