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3 strategies to weather 'tough' earnings: JPMorgan

With first quarter corporate earnings projected to sink, investors should look for dividend growth and short-term protection, and reduce their broad market exposure, JPMorgan strategist Steven Rees said Wednesday.

"The bad news is it's going to be tough. Everybody knows that. Estimates have come down," JPM Private Bank's global head of equity strategy told CNBC's "Squawk Box." "I think what's missing is there will be pockets of growth this quarter."

Valuations in the health care, consumer discretionary and technology sectors look "especially compelling," Rees told CNBC. These sectors are trading below long-term averages, but JPMorgan expects them to outpace the broad market in terms of earnings growth in 2016.

JPMorgan Private Bank is focused on select large cap pharmaceuticals and biotech, "growth leaders" in tech with reasonable valuations and consumer-oriented companies exposed to the housing sector and "evolving trends."

In a range-bound market, investors can capture returns of 3 percent or more by investing in dividend-yielding stocks, Rees said. However, he cautioned against defensive sectors like telecoms and utilities because those stocks have gotten expensive. Instead, he advised looking for dividend opportunities in health care and consumer equities.

"With the Fed potentially on hold for longer, stocks yielding 3, 4 percent that can grow those dividend yields look more attractive in this environment," he said.

Lastly, investors can buy short-term protection against another potential dip in oil prices, election-year volatility and the chance of an interest rate surprise by purchasing S&P put spreads, which Rees said are currently priced reasonably.

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