Amsterdam, Nov 27 - ING likes the investment opportunities offered by telecoms, pharmaceutical, food and beverages and oil companies for the next year due to expected stable dividend yields, ING Investment Management said on Thursday.
"When you look at the last recession in early 2000 you can see that high-dividend investments relatively did very well. We expect the same to occur in 2009," ING Investment Management Equity Strategist Ad van Tiggelen told reporters.
ING wants to avoid companies which might cut dividends when the recession hits earnings, such as financial and industrial firms, Van Tiggelen told reporters. He declined to name companies.
Financial groups like Royal Bank of Scotland and Citigroup have cut their dividends after writedowns hit profits, while Dutch telecoms group KPN last month confirmed its 2010 target, including a 2010 dividend of 0.80 euros per share.
Large cap investments are better than small caps, because smaller companies were more sensitive to higher interest rates charged for credit, and ING prefers the U.S. and Japan over Europe, Van Tiggelen said.
"Usually Europe is most hit on the earnings side in a recession," he said, adding that he also expected a negative impact from a stronger dollar against the euro next year.
Global equity markets are reaching bottom levels and stocks will move sideways with high volatility and probably end up a bit higher at the end of 2009, Van Tiggelen said.
"Equities usually find a bottom at the beginning of a recession, while earnings usually bottom at the end of it," he said.