In the hunt for yield, these Dow stocks could be investors' best bets

Rising rates are shaking the market to its core as bond yields held at their highest level in seven years, but an unexpected group of winners is emerging.

Bond proxies, often victim to rising rates, have held up surprisingly well. Sectors like consumer staples, utilities and real estate have been outperforming the broader market. And the biggest blue chip high-dividend stocks like Verizon, IBM, Exxon Mobil and Procter & Gamble are all in the green over the past three months.

One of those names looks primed for a breakout, said JC O'Hara, chief market technician at MKM Partners.

"One of our favorite charts is the chart of Verizon," O'Hara said Tuesday on CNBC's "Trading Nation." "If we look at the recent price performance, we saw a bearish-to-bullish reversal here and to us that shows us that the bulls are back engaged in the stock."

Dow stock Verizon tumbled 25 percent from its peak in mid-2016 to a trough in mid-2017. Its downward trend reversed itself from that July 2017 bottom and it has since rallied back to those 2016 highs, a gain of 30 percent.

On a total return basis, Verizon has also broken out above a key resistance level stretching back to those highs more than two years ago, said O'Hara.

"If you look at the total return, you actually see that bearish-to-bullish reversal, we saw the price broke out," said O'Hara. "We have a great chart that's breaking to new highs. That's something that we like."

Verizon broke above its 2016 peak on a total return basis earlier this year.

Verizon also finds a fan in Boris Schlossberg, managing director of FX strategy at BK Asset Management.

"Verizon is my favorite name among all those high yielders for a completely different reason — because of 5G," Schlossberg said Tuesday on "Trading Nation." The next generation of wireless networks, 5G, "could upend markets in gaming and broadcasting and Verizon is going to be the first player in that space."

The other buy in the group, according to Schlossberg, is Exxon Mobil, another Dow stock he likes for its high dividend. He says the oil company should ride the energy wave as crude prices hold above more than $70 a barrel.

Verizon has a dividend yield of 4.4 percent, while Exxon Mobil yields 3.8 percent.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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