BlackRock's CIO Optimistic About Stock Income

Tony DeSpirito, BlackRock's global chief investment officer of fundamental equities, emphasizes the importance of quality and value when selecting dividend-paying stocks for the firm's flagship equity fund. With 18 years of experience as a value investor prior to joining BlackRock in 2014, DeSpirito believes that the current market environment is conducive to stock picking and alpha generation. The BlackRock Equity Dividend fund, which has a 30-day SEC yield of 1.69% and an expense ratio of 0.93%, has faced challenges, notably in 2021 when it underperformed its benchmark and peers. As of July 31, CVS Health stands as the fund's largest health-care holding, comprising 2.46% of the portfolio. DeSpirito highlights the health-care sector's stability and the presence of high-quality businesses that are currently undervalued. He notes that companies characterized by low volatility and high stability have been overlooked in recent market rallies, leading to increased discounts on their valuations. In 2022, DeSpirito invested in Eli Lilly, which now represents 0.81% of the fund, recognizing its potential as a future blockbuster. His investment strategy also includes a significant focus on stable earners, particularly in sectors like insurance and exchanges. He points out that regulatory changes have made banks safer and more stable, further enhancing their appeal as investment options in the current market landscape.