In response to escalating market volatility, Jefferies suggests investors consider high-dividend, low-volatility stocks as a defensive strategy. Analyst Desh Peramunetilleke identifies companies like Procter & Gamble, Pfizer, Simon Property Group, and KeyCorp, which meet stringent criteria for market cap, dividend yield, and volatility.
These selections aim to provide a hedge against potential downturns, especially if concerns surrounding the AI sector intensify. The analysis focuses on companies offering stable income and resilience amidst economic uncertainties.
Navigate Market Volatility: Jefferies Recommends High-Dividend, Low-Volatility Stocks
By Michelle Fox
July 10, 2026
In a turbulent market environment, investors are seeking refuge in assets that offer stability and income. According to a recent analysis by Jefferies, a strategic approach involving high-dividend and low-volatility stocks could be key to protecting portfolios from current market swings. While major indexes have seen gains this year, the journey has been far from smooth, marked by concerns over geopolitical events, oil prices, inflation, and the frothy valuations of AI-related stocks.
Desh Peramunetilleke, an analyst at Jefferies, noted that volatility has spiked in the AI sector due to concerns about hyperscaler return on investment, elevated expectations, significant fundraising activities, and extreme market positioning, particularly with large retail investor involvement. While the long-term prospects for AI remain strong, Peramunetilleke suggests that an unwinding of AI-led momentum could occur. As an alternative, he identifies low-volatility stocks with high dividend or free-cash flow yields as attractive options for the summer, potentially serving as a hedge against a market correction if AI-related concerns escalate.
Jefferies' Stock Selection Criteria
To identify these resilient stocks, Jefferies screened U.S. companies with a market capitalization exceeding $10 billion. The criteria included stocks in the bottom quintile of volatility, possessing a 12-month forward dividend yield above 3% or a free cash flow yield above 3% over the last 12 months. Additionally, the selected companies needed to demonstrate positive or flat estimated earnings-per-share revisions for 2026 over the past three months.
Featured High-Dividend, Low-Volatility Stocks
Procter & Gamble (PG)
For investors seeking a classic defensive stock, Procter & Gamble (PG) stands out with its 12-month forward dividend yield of 3%. The consumer packaged goods company recently reported fiscal fourth-quarter earnings that surpassed expectations for both adjusted earnings per share and revenue, driven by increased product volumes. Analysts generally favor PG, with an average 'overweight' rating and a projected 10% upside to the consensus price target. The stock has shown resilience, gaining nearly 3% year-to-date, outperforming the broader market in a choppy environment.
Key Metrics:
- Market Cap: Over $10 billion
- 12-Month Forward Dividend Yield: 3.0%
- Year-to-Date Performance: Approx. +3%
- Analyst Rating: Overweight
- Estimated Upside: 10%
Pfizer (PFE)
Pfizer (PFE), the pharmaceutical giant, offers a significant 12-month forward dividend yield of 6.9%. Despite being down approximately 2% year-to-date, the company recently exceeded Wall Street estimates for both earnings and revenue in its first quarter. Recent developments include the FDA approval of its Padcev and Keytruda combination for muscle-invasive bladder cancer. However, an experimental lung cancer drug trial did not show statistically significant improvement compared to chemotherapy. Pfizer holds an average 'hold' rating from analysts, with an estimated 16% upside to the average price target.
Key Metrics:
- Market Cap: Over $10 billion
- 12-Month Forward Dividend Yield: 6.9%
- Year-to-Date Performance: Approx. -2%
- Analyst Rating: Hold
- Estimated Upside: 16%
Simon Property Group (SPG)
Simon Property Group (SPG), a prominent mall operator and real estate investment trust, boasts a 12-month forward dividend yield of 4.30% and has seen a 18% increase year-to-date. The company reported strong second-quarter results, exceeding expectations for funds from operations, and raised its full-year guidance and quarterly dividend. CEO Eli Simon highlighted strong operating performance, driven by leasing momentum, increased retailer sales and traffic, and disciplined capital allocation. Analysts maintain an average 'overweight' rating, with a projected 2% upside to the consensus price target.
Key Metrics:
- Market Cap: Over $10 billion
- 12-Month Forward Dividend Yield: 4.30%
- Year-to-Date Performance: Approx. +18%
- Analyst Rating: Overweight
- Estimated Upside: 2%
KeyCorp (KEY)
KeyCorp (KEY), a financial services company, offers a 12-month forward dividend yield of 3.8% and has risen approximately 12% year-to-date. The company reported first-quarter EPS and revenue that beat estimates. Analysts are bullish on KeyCorp, with an average 'overweight' rating and an estimated 7.5% upside to the consensus price target.
Key Metrics:
- Market Cap: Over $10 billion
- 12-Month Forward Dividend Yield: 3.8%
- Year-to-Date Performance: Approx. +12%
- Analyst Rating: Overweight
- Estimated Upside: 7.5%
Conclusion
As market uncertainty persists, focusing on companies with robust dividend yields and stable, low-volatility profiles can provide a crucial layer of defense for investment portfolios. Jefferies' selection methodology highlights companies that not only offer attractive income streams but also demonstrate resilience in challenging economic conditions.
