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BARCLAYS: Buy these 30 ‘cheapened’ stocks with high incomes that can beat macro headwinds or rising rates

Summary List PlacementAfter a tough year, dividend investing is coming back in vogue, as investors look to their stock positions for income, especially right now, as interest rates are so low and returns can often be small. During the coronavirus pandemic, many companies were forced to cut their payouts to...

Barclays Trading Floor

Summary List Placement

After a tough year, dividend investing is coming back in vogue, as investors look to their stock positions for income, especially right now, as interest rates are so low and returns can often be small.

During the coronavirus pandemic, many companies were forced to cut their payouts to shareholders, especially those that are typically higher yielding – like banks – which crippled the value of their shares.

But, with economic recovery on the cards and fixed-income assets like government bonds looking less attractive, some of those beaten-down stocks with high dividends – nicknamed “yield stocks” – are well placed to benefit.

“We currently OW [overweight] yield as its valuation and high yield look attractive, even if we don’t expect it to be a key beneficiary of growth rebound in 2H,” Barclays strategists, including Emmanuel Cau, wrote in a note published on Wednesday.

“Its cheapness stems somewhat from the market looking expensive rather than yield looking particularly cheap, which could reverse as the market normalizes in the coming 6-12 months,” they added.

With share buybacks and a return to dividend payouts on the cards, as the financial and regulatory pressures on company balance sheets ease, investors are getting bullish on high-yielding stocks.

High-dividend stocks tend to exhibit some qualities similar to so-called value stocks, which are closely linked to the performance of the economy, because they often trade at slightly cheaper price-to-earnings ratios. They tend to be undervalued because their stock price trades lower relative to the company’s fundamentals.

“Yield typically trades in line, or slightly lower, than the market on P/E, although is currently trading at its cheapest ever multiple relative given how expensive the market has become,” the note added.

However, historically, yield stocks have not had a consistent relationship with the economic cycle, which could offer an attractive opportunity for those investors with an income tilt.

“It shows little correlation to other asset classes or macro environment, although some correlation to financials in equity markets, perhaps because they are higher yielders,” the note said.

With macro trends like inflation posing a threat to typical income assets like government bonds, yield stocks offer a cheap and attractive alternative.

These are the top 30 yield stocks that Barclays has handpicked:

1. AKER BP ASA

Ticker: AKERBP.OL

Market cap: $10.32 billion

Sector: Energy

Source: Barclays

2. TOTAL SE

Ticker: TOTF.PA

Market cap: $122.19 billion

Sector: Energy

Source: Barclays

3. BP PLC

Ticker: BP.L

Market cap: $122.19 billion

Sector: Energy

Source: Barclays

4. UPM-KYMMENE OYJ

Ticker: HEL: UPM

Market cap: $122.19 billion

Sector: Materials

Source: Barclays

5. ACERINOX SA

Ticker: BME: ACX

Market cap: $3.42 billion

Sector: Materials

Source: Barclays

6. RIO TINTO PLC

Ticker: ASX: RIO

Market cap: $124.34 billion

Sector: Materials

Source: Barclays

7. INTRUM AB

Ticker: STO: INTRUM

Market cap: $3.92 billion

Sector: Industrials

Source: Barclays

8. HOCHTIEF AG

Ticker: HOTG.F

Market cap: $6.22 billion

Sector: Industrials

Source: Barclays

9. ACS ACTIVIDADES CONS

Ticker: BME: ACS

Market cap: $9.77 billion

Sector: Industrials

Source: Barclays

10. BAYERISCHE MOTOREN

Ticker: ETR: BMW

Market cap: $63.9 billion

Sector: Consumer Discretionary

Source: Barclays

11. ELECTROLUX AB-SER B

Ticker: STO: ELUX-B

Market cap: $77.14 billion

Sector: Consumer Discretionary

Source: Barclays

12. BERKELEY GROUP

Ticker: LON: BKG

Market cap: $7.54 billion

Sector: Consumer Discretionary

Source: Barclays

13. WM MORRISON Supermarkets

Ticker: LON: MRW

Market cap: $6.00 billion

Sector: Consumer Discretionary

Source: Barclays

14. TESCO PLC

Ticker: LON: TSCO

Market cap: $24.30 billion

Sector: Consumer Discretionary

Source: Barclays

15. BRITISH AMERICAN TOBACCO

Ticker: LON: BATS

Market cap: $88.36 billion

Sector: Consumer Discretionary

Source: Barclays

16. MERCK KGAA

Ticker: ETR: MRK

Market cap: $22.22 billion

Sector: Health care

Source: Barclays

17. BAYER AG-REG

Ticker: ETR: BAYN

Market cap: $61.62 billion

Sector: Health care

Source: Barclays

18. GLAXOSMITHKLINE PLC

Ticker: LON: GSK

Market cap: $89.79 billion

Sector: Health care

Source: Barclays

19. LEGAL & GENERAL

Ticker: LON: LGEN

Market cap: $22.83 billion

Sector: Financials

Source: Barclays

20. DIRECT LINE INSURANCE

Ticker: LON: DLG

Market cap: $6.03 billion

Sector: Financials

Source: Barclays

21. MAPFRE SA

Ticker: BME: MAP

Market cap: $6.46 billion

Sector: Financials

Source: Barclays

22. BE SEMICONDUCTOR

Ticker: AMS: BESI

Market cap: $6.31 billion

Sector: Information Technology

Source: Barclays

23. SAGE GROUP PLC/THE

Ticker: LON: SGE

Market cap: $9.18 billion

Sector: Information Technology

Source: Barclays

24. TIETOEVRY OYJ

Ticker: HEL: TIETO

Market cap: $3.76 billion

Sector: Information Technology

Source: Barclays

25. TELENOR ASA

Ticker: HEL: TIETO

Market cap: $24.17 billion

Sector: Communication Services

Source: Barclays

26. ORANGE

Ticker: EPA: ORA

Market cap: $24.17 billion

Sector: Communication Services

Source: Barclays

27. TELEFONICA SA

Ticker: BME: TEF

Market cap: $26.33 billion

Sector: Communication Services

Source: Barclays

28. ENEL SPA

Ticker: BIT: ENEL

Market cap: $101.16 billion

Sector: Utilities

Source: Barclays

29. ENDESA SA

Ticker: BME: ELE

Market cap: $28.32 billion

Sector: Utilities

Source: Barclays

30. RED ELECTRICA

Ticker: BME: REE

Market cap: $9.36 billion

Sector: Utilities

Source: Barclays

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