The U.S. Federal Reserve’s recent policy meeting and broader geopolitical tensions offer some insight as to where investors should place their money…
Year to date, the S&P 500 has declined by 17%. Meanwhile, the Dow Jones and Nasdaq Composite have fallen by 12% and 27%, respectively.
Fueling these massive declines is Wall Street’s ongoing focus on Russia’s invasion of Ukraine… as well as the Federal Reserve’s decision to raise interest rates higher than previously projected.
With material shortages, a tight labor market, and surging inflation, the central bank said it will raise interest rates by 0.50%.
The Fed also increased the federal-funds target from a range of 0.25% to 0.50% to a greater range of 0.75% to 1.00%.
Meanwhile, Russia’s war against Ukraine has not only severely impacted its economy, but has also put pressure on European markets due to a decrease in oil and natural gas.
These factors have amplified fears among institutional investors and money managers. However, it has also helped create a clearer picture of how to play the market.
As a result, many are investing in defensive, dividend-yielding stocks like Lockheed Martin (LMT).
That’s because Lockheed tackles two birds with one stone…
It pays a dividend yield of 2.49% while also operating as the largest defense contractor in the world – developing and selling modern military weapons and equipment to not only the U.S. government, but also its allies.
This means it benefits during times of peace and also periods of geopolitical turmoil, as it regularly receives billions of dollars in orders for F-35 jets, satellite equipment, and intelligence technology.
And these investments will only continue to rise in the decades ahead given the great power struggles between the U.S., NATO, Russia, and China – likely driving orders and backlog substantially higher and supporting increased yields in the process.
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