Geopolitics Have Struck Fear in the Market – Yet It’s Never as Bad as It Seems
Vladimir Putin did the unthinkable and launched a full-scale invasion of Ukraine- a sovereign country.
Since WWII, we have not seen an assault like this in Europe. In Mr. Putin’s mind, destabilizing the world order may be a good thing. Unfortunately for him, he has created a potential economic catastrophe for his country thanks to the world’s crippling sanctions.
U.S. and European equities, while volatile, have been nowhere near hit as hard as the Russian MOEX.
The ruble has fallen so hard that it’s no longer even worth a penny. The Bank of Russia had no choice but to raise its interest rate to 20% from 9.5%. All while suspending trading at the Moscow Exchange every day in the week following the invasion.
However, we are not out of the woods. U.S. indices will continue to weigh these geopolitical risks while the Fed remains hawkish while confronting historically high inflation.
Most notably, we will feel the effects at the gas pump. Russia is the world’s second-largest oil producer and top natural gas producer. Brent Crude has soared to $105 and WTI past $103 (and over 8% in one day, March 1).
Gasoline prices also rose 8 cents the week of Russia’s invasion. This surge comes on the heels of a 24 cent increase throughout February and 87 cents compared to a year ago.
The natural gas situation in Europe is even direr. With Europe receiving 40% of its natural gas supply from Russia, prices skyrocketed 60% the invasion week. On March 1, prices briefly touched a record high of 194 euros per megawatt-hour.
Worsening ripple effects could inevitably reach North American shores.
You can prepare for these potential headwinds by adding exposure to quality, monthly dividend-paying stocks. In times of uncertainty, consistent, monthly dividend payments can do wonders for your security and cash flow.
Based on a deep dive into financial research platform Finbox, we’ve uncovered three monthly dividend payers to consider in March based on current yield and forward prospects.
Our March picks are all Real Estate Investment Trusts (REITs). Under the IRS tax Code, REITs must pay 90% of their taxable income to shareholders. Because this means REITs typically don’t pay corporate income taxes, that means mouth-watering, potential monthly dividends for investors.
Related: The Ultimate List of 24 Investments That pay Monthly Income
AGNC Investment Corp. (NASDAQGS:AGNC)
AGNC Investment Corp. (NASDAQGS:AGNC) is our first monthly dividend stock for March. It operates as a REIT and invests in residential mortgage pass-through securities and collateralized mortgage obligations. It funds its investments primarily through collateralized borrowings structured as repurchase agreements. United States government-sponsored enterprises or agencies secure AGNC’s principal and interest payments.
By midday March 2, the AGNC stock traded at about $12.90 a share, a far cry from the $15.38 it peaked out in 2022 in mid-January. However, with an 11.1% dividend yield, this is a play to consider. Dividends per share are also forecast to be $1.44 in the next fiscal year (forward yield 11.16%).
Dynex Capital, Inc. (NYSE:DX)
Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS principal payments are typically safe and secure thanks to the backing of U.S government agencies or sponsored entities such as Fannie Mae or Freddie Mac.
This year, Dynex has seen some ups and downs. But it is best known for the significant monthly dividend it pays to shareholders. Its current dividend yield is 10.2%, and it has a forecasted $1.56 dividend for the next fiscal year.
Broadmark Realty Capital Inc. (NYSE:BRMK)
Broadmark Realty Capital Inc. and its subsidiaries engage in underwriting, funding, servicing, and portfolio management for the short-term and first deed of trust loans to fund the construction, development, and investment in U.S.-based residential or commercial properties. It also provides short-term and first deed of trust loans secured by real estate to fund the construction and development of residential or commercial properties.
Broadmark could be a very enticing option for investors right now. Broadmark’s RSI suggests that it’s oversold, and its 10% dividend yield and forecasted yield of 10.16% could pose a mouth-watering opportunity. The combination of being undervalued with consistent monthly dividends could provide anxious investors with peace of mind.
With all this talk about WWIII, let’s see what happened to the market when an actual world war occurred.
Following the invasion of Pearl Harbor, the S&P plunged as much as 19.8% the six months following it. Yet it took a mere 307 days for the S&P to fully recover. The war lasted another four years.
Throughout history, markets have seen numerous geopolitical conflicts. Because markets typically look forward, they can often be consumed by hysteria and volatile swings, especially during a conflict’s initial shock. The Ukraine conflict could continue and worsen, and we may not be at the market’s bottom just yet.
Things are far from perfect, and we haven’t been this close to a world war in years. Putin putting his nuclear forces on “combat readiness” isn’t the fuzziest news, either. But, consider this. You only lock in your losses when you sell, and there are still plenty of opportunities.
The above options are three strong choices that can give you consistency and peace of mind in these uncertain times.
We encourage you to do your due diligence, find investments that pay consistent monthly income streams, and stay as level-headed as possible in a world full of panic.