High Yield, Low Beta Stocks to Buy for the Next Market Meltdown

The market's fear indicator, the VIX index, is bobbing along at long-term lows and gives little indication of a looming correction, but investors should assume one is brewing. The index is down at its lows because the recession that was supposed to happen in 2023 never materialized. What has materialized is the persistent need for high interest rates and upside risk to the outlook. In this scenario, rising oil prices underpin a renewed expectation for accelerating inflation and additional FOMC interest rate hikes this year. 

Risk-averse investors may choose to sit out the next few months and quarters due to the economic risks, but they don't have to. There are ways to gain exposure to the market while limiting risk and volatility. One method is to focus on low-beta stocks. Beta is a measure of market volatility relative to the S&P 500 NYSEARCA: SPY; the lower the beta, the less volatile the stock. But what does that mean to the average investor? Low-beta stocks will fall less when the S&P falls 1%, and most pay dividends. 

The stocks on this list come from a screen using Marketbeat.com's updated stock screening tools. The screen is simple and looks for high-yielding, low-beta names of blue-chip quality. These stocks all yield at least 3.0% and trade with about half the volatility of the S&P 500 or less. 

The Coca-Cola Company: A Royally Good Dividend 

The Coca-Cola Company NYSE: KO is a surprisingly resilient stock, given its age and ability to continue growing. The Q2 results included mid-single-digit top-line growth, outperformance on the top and bottom lines, and increased guidance that failed to excite the analysts. The company has been lowering its Q3 and FY2023 results targets and has set the bar low. The next report is due at the end of October and may get the stock to increase. Regardless, Coca-Cola is a Dividend King with 60 years of consecutive dividend increases and the power to continue increasing the distribution at a low single-digit pace. 

KO stock pays a dividend yield of about 3.15%, with shares trading near $59. The $59 level is consistent with a critical moving average and potential support, so an updraft in the price action is possible before the end of the year. Regarding the beta, Coca-Cola's 24-month beta is only 0.56, making it about half as volatile as the S&P 500. Add in the fact that KO is already down for the year and trading near critical support; the odds are high that any upcoming broad-market weakness is already priced into this stock. 

AbbVie: A Dividend King in the Making 

It will be several decades before AbbVie NYSE: ABBV reaches Dividend King status, but it is well on the way. Add in the pre-spin-off history of Abbott Laboratories, and AbbVie is a King and one with the power to grow its already substantial payout. The stock yields almost 4%, with shares trading near $149, and the distribution is less than half the earnings outlook. The company is facing a slowdown in Humira sales due to patent expirations, but sales were stabilizing in the last report, and new drugs Skyrizi and Rinvoq are gaining traction. Regarding volatility, AbbVie has a 24-month beta of 0.46 and is less volatile than Coca-Cola. 

Verizon: High-Yield, Low-Beta with Nowhere to Go but Up

Verizon NYSE: VZ is this list's highest-yielding, lowest-volatility stock, with a distribution worth 8% and a beta of 0.34. The stock is also a deep value after selling off over the last year but is at a turning point. The analysts all see the stock moving higher; it is trading beneath the lowest price target on record, and the most recent action is bullish. Citigroup upgraded the stock to a high-risk Buy with a price target of $40. That's below the consensus but a solid 20% above the current action.