Dividend stocks beat the market during recessions. UBS gives 10 with the most upside

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Dividend stocks may be the way to go for investors as a recession becomes more likely, according to UBS.

Dividend stocks on average outperformed the market by 4.5% during the 2001, 2008 and 2020 recessions, the bank said. U.S. equity product manager Joseph Parkhill noted that these stocks can provide a cushion for investor portfolios amid the current uncertainty as inflation remains stubbornly high. Investing strategies focusing on dividend growth "have been significantly less volatile" than others focusing on earnings and buyback growth, Parkhill wrote in a Monday note.

To be sure, shares have tumbled more than 43% during the past 12 months. Despite the recent investor concerns surrounding the banking sector, several regional banks including Huntington Bancshares and Fifth Third Bancorp made the list. Huntington Bancshares' stock has fallen 20.5% in 2023. Nonetheless, UBS forecasts shares rallying 57.7%.

 

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