High-Yield Dividend Stocks Stay Dominant As Basic Materials Get Blasted On Recession Fears

Equity markets took it on the chin following disappointing reports on inflation last week that came in much hotter than expected and dashing expectations that the data would show inflation moderating. Consumer prices in June rose 9.1% year-over-year and producer prices surged into the double digits at 11.3%, just below the 11.6% rate in March. By the close on Friday, however, positive earnings reports from big banks like CitigroupC
C
helped stocks trade well above their lows for the week.

The two worst places to be last week were in the energy sector and emerging markets. Energy fell more than 3% as crude oil tumbled another 6.9% to close out the week at $97.59 per barrel, down from more than $120, just one month ago. Emerging markets are very sensitive to inflation and higher U.S. interest rates, and the EEMEEM
EEM
was lower by 3.6% on the week. Consumer staples was the only sector not to decline.

Equity Income Universe: As they have throughout 2022, dividend-paying stocks performed better than the overall market. Most of the funds we track were down less than 1%, but international dividend payers were laggards: PowerShares International Dividend Achievers (PID -1.9%), SPDR S&P Global Dividend (WDIVWDIV
-2%), and Vanguard International Dividend Appreciation (VIGVIG
VIGI
I -1.4%).

The VanEck BDC Income (BIZDBIZD
-1.4%) reversed course after shining last week as the best performing equity-income fund, while the Alerian MLP (AMLPAMLP
AMLP
-0.03%) ETF fared better than oil, basically breaking even for the week.

FDI Portfolio Action: It was a rough week for basic materials stocks, and that was the case for Kronos WorldwideKRO
and Ternium, but the 23 stocks in last week’s Forbes Dividend Investor portfolio on average kept declines in check, falling 0.53%. This keeps the FDI portfolio at #3 for year-to-date total return among the dividend ETFs and mutual funds that we track each week.

Delivering the best weekly performance again was Qualcomm
QCOM
QCOM
(QCOM +6.2%), which built on last week’s 10% gain. Baby clothes company Carter’s (CRI +4.6%) also remained strong, along with packaging and container maker Greif (GEF.B +3.7%).

Click here for instant access to the complete Forbes Dividend Investor portfolio, including Friday’s most recent buy, a company that makes everything from highway paint to Post-It Notes.

John Dobosz is editor of Forbes Dividend Investor, which provides a weekly portfolio of high-yielding, value-priced income stocks, REITs and MLPs, and Forbes Premium Income Report, which sends out options-selling trade recommendations on two dividend-paying stocks every Tuesday and Thursday.