Jefferies favors low-volatility, high-yield U.S. stocks as AI volatility spikes

According to CNBC, Jefferies analyst Desh Peramunetilleke said volatility in the AI theme has jumped on concerns about hyperscaler ROI versus potential overcapacity, elevated expectations, large fund-raisings and extreme positioning, and he expects those factors could unwind AI-led momentum. He said he prefers low-volatility stocks with high dividends or free-cash-flow yields as a hedge against a sharp correction, screening U.S. companies with market caps above $10 billion in the bottom quintile of volatility, a 12-month forward dividend yield above 3% or a free cash flow yield above 3% over the last 12 months, and positive or flat 2026 estimated EPS revisions over the last three months. Names highlighted included Procter & Gamble with a 3% 12-month forward dividend yield and fiscal fourth-quarter earnings due July 29; Pfizer with a 6.9% forward dividend yield and results expected Aug. 4, after the FDA approved its Padcev and Keytruda combination for muscle-invasive bladder cancer and after an experimental lung cancer drug missed a late-stage trial endpoint; Simon Property Group with a 4.30% forward dividend yield, up 18% in 2026, after raising full-year guidance and its quarterly dividend; and KeyCorp with a 3.8% forward dividend yield, up about 12% year to date, with second-quarter earnings due July 21.