The S&P 500 just hit a new all-time high to declare bull market status, but one asset manager with more than $1 trillion under management says there are stocks investors can watch for the next stage of the cycle. There are several. Saira Malik, portfolio manager and chief investment officer at Nuveen, which has $1.1 trillion in assets under management, said she remains cautious despite recent market strength. For Malik, there are plenty of risks to worry about in 2024, including the exact path the Fed will take to lower interest rates, the presidential election, and the possibility of a downturn in U.S. consumer spending. “The Fed is likely to continue pressing the pause button until the second half of this year,” she said. “We are concerned about U.S. consumers who are struggling with high interest rates and record levels of credit card debt.'' .SPX 1Y Mountain S&P 500 The S&P 500 hit an intraday high on Friday. , which skyrocketed at the end of 2023, posting a 24% gain for the year. Investors believe the economy has avoided the recession many expected earlier this year, that inflation has fallen to levels that would allow the Fed to halt rate hikes, and that artificial intelligence is driving a boom in productivity and profits. It was highlighted by the fact that he was thought to be doing so. But with the incredible bull market in the second half of 2023 continuing into the new year, Malik is wary of a potential downturn on the horizon. He currently recommends de-emphasizing less cyclical companies in favor of more defensive and less economically sensitive sectors. Here are some of the picks she shared with her CNBC Pro. Dividend Growth Companies Investors favor companies that can grow their dividend payments because they tend to have sufficient free cash flow and sustainable growth. One name she highlighted was chemicals maker Linde, which she said is performing strongly amid continued demand for industrial gases. “They are also investing in new areas such as clean hydrogen,” Malik said. “Linde is focused on shareholder returns through a combination of share buybacks and dividends.” He added that Linde's dividend is expected to increase by 9% in 2023 and increase annually. After surging 26% last year, the stock price will remain largely unchanged in 2024. Another dividend-growing stock she likes is communications equipment maker Motorola Solutions, which Malik said has benefited from increased government spending and an increased focus on public safety. Separately, Deutsche Bank on Friday gave Motorola a “buy” rating and started with a price target of $350. Malik also likes Motorola's steady growth in revenue and cash flow. The stock price rose about 5%, following a 21% rise in 2023. Infrastructure stocks Malik believes that global infrastructure companies benefit from the inelasticity of demand for the necessary services they provide and are therefore insulated from most recession risks. Her favorite industry name is her electric utility company, CMS Energy. Malik said her Jackson, Michigan-based company, which has 7 million customers, will benefit from the state's legally mandated transition to renewable and clean energy. The stock, which yields 3.5%, underperformed last year, down 8%, and is expected to fall another 3% by 2024. “Both dividend growth stocks and global infrastructure stocks have historically weathered market declines relatively well,” Malik said.
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