Morgan Stanley highlights quality dividend stocks
Quality stocks gain favor as Morgan Stanley sees broader market rotation Strong cash flow, margins, and balance sheets could help investors find the next winners
Morgan Stanley says investors may want to focus on quality stocks as markets broaden beyond technology. The firm points to companies with strong free cash flow, steady earnings, solid balance sheets, and high margins.
In a Tuesday note, strategist Mike Wilson said the current rotation looks like a typical midcycle shift as the economy matures. He also said artificial intelligence adoption may become more important for margin growth than the earlycycle gains seen earlier in the recovery.
Among the dividendpaying stocks that Morgan Stanley screened in its overweightrated list are CocaCola, ColgatePalmolive, SLB, and Gilead Sciences. CocaCola rose after reporting betterthanexpected quarterly results and lifting its fullyear outlook, while ColgatePalmolive is due to report earnings later this week. SLB recently topped secondquarter estimates, and Gilead is expected to report results next week.