The start of September has been scary for Wall Street, with all the major indices down in the initial week driven by a steep sell-off in the tech sector and Trump’s new tariff threat. In fact, the Nasdaq Composite Index logged its worst start to September since 2008.

Donald Trump threatened to impose tariffs on $267 billion worth of goods, in addition to the proposed 25% duty to be levied on $200 billion of Chinese goods. The move will escalate trade tensions between the United States and China. Additionally, Bloomberg News reports that the United States and Canada will likely end this week with a no-trade deal.

Further, the prospect of faster-than-expected rates hikes following the upbeat job data for August also took a toll on stocks. If these weren’t enough, the seasonal phenomenon resulted in the decline. September is historically a weak month for the stock market and even worse in the mid-term election years.

However, economic fundamentals remain sound and are expected to keep the positive momentum alive albeit at a slower pace. The raft of upbeat data shows that the economy is piping hot, given that the American economy is witnessing the fastest pace of growth in nearly four years with a nearly two-decade low unemployment rate of 3.9% and an 18-year high consumer confidence. Historic tax cuts, higher government spending, and deregulation are fueling growth.

In such a scenario, investors are looking for products that provide stability and safety in a rocky market. Nothing seems a better strategy than picking a combination of value stocks with higher dividend yields in this kind of an environment.

Inside the Strategy

Value stocks have strong fundamentals — earnings, dividends, book value, and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payments serve as a safety in times of market turbulence.