Daniel Foelber (Illinois Tool Works): At first glance, Illinois Tool Works (ITW) may not seem like an ideal stock to own during a market sell-off, given its exposure to the cyclical automotive industry and other sectors. However, ITW’s diversification is one of its strengths. The company’s segments span automotive components, food-processing equipment, testing and measurement devices, welding equipment, and more.
Each ITW segment maintains high operating margins and does not constitute too large a share of the business, allowing the broader company to absorb slowdowns in individual segments. In addition to its high margins and diversification, ITW is a Dividend King, having increased its dividend for 53 consecutive years. The company’s recent dividend increases, such as the 7% hike in August 2024, provide predictability for investors.
diversification strengthens Illinois Tool Works
Although ITW is not a bargain with its 2.3% yield and a 24.1 forward price-to-earnings ratio, its dividend quality makes it worth the premium price, especially during market turbulence. Lee Samaha (JPMorgan Equity Premium Income ETF): For investors looking for a safer way to generate passive income even during downturns, the JPMorgan Equity Premium Income ETF is worth considering.
This ETF currently yields 7.3%, primarily by investing at least 80% of its assets in equities and up to 20% in equity-linked notes (ELNs) that sell monthly call options linked to the S&P 500 index. The ETF’s strategy of selling call options allows it to pick up premiums, ensuring income generation even when the S&P 500 performs moderately or declines. Therefore, if there is a market sell-off in 2025, this ETF is expected to perform relatively well and continue generating monthly income for its investors.
In conclusion, ExxonMobil, Illinois Tool Works, and the JPMorgan Equity Premium Income ETF are three formidable dividend stocks to consider for your portfolio, offering resilience, consistent income, and growth potential even in turbulent market conditions.
