Bank of America has named European companies whose shares are expected to perform strongly in the face of a possible recession. It comes amid growing signs that the European economy may be facing a protracted recession. Preliminary data last week suggested that business activity growth in June would slow, and earlier this month the eurozone group of countries reported a quarterly decline, sending the country into a recession. into a technical recession. Bank of America’s proprietary Style Cycle model also shows the region is facing a “recession period.” This economic phase-tracking model indicates that the European economy is currently in recession for the first time since Q2 2020. In such an economic environment, strategists at the bank Pho Wall said it favors large companies that are seen as more valuable than growth, high quality and low risk. Bank-selected companies stand out because they are expected to deliver high cash returns in the face of an impending recession. This means they should provide investors with a steady stream of cash through dividends or share buybacks, even if the overall economy isn’t doing so well. These companies are all part of the Europe Stoxx 600 index, have a market capitalization of at least 5 billion euros ($5.4 billion) and offer better-than-average 12-month cash yields for stocks. their respective fields. Cash forward yield measures the amount of cash a company is expected to generate for its shareholders over the next year relative to current market prices. Among the companies named by BofA are: Belgium’s KBC, Italy’s Intesa Sanpaolo and Eni, Finland’s Nordea Bank, Spain’s Repsol, the United Kingdom’s Barclays and Aviva and France’s BNP Paribas. These companies, among others, belong to the banking, energy and insurance group. Banking and insurance group KBC topped the list with a 12-month dividend yield of 8.1% and a total cash yield of 14.2%, according to the bank’s forecast. Cash yield also includes profits through buybacks. According to Paulina Strzelinska, quantitative strategist at Bank of America, the difference between a company’s dividend and bond yields has turned negative for the first time since 2011. In other words, companies are now paying for their shareholders more than investors can earn from the bond. This year alone, 133 new buyback programs have been announced, with 27 from banks, 15 from energy companies and 13 from industry, according to the research note. Strzelinska research sent to customers on June 21. Based on historical BofA data, specific sectors such as food, beverage and tobacco stores, healthcare, personal and goods Household appliances have performed better during the economic downturn. The investment bank strategist added that some cyclical sectors, such as autos, fundamental resources and energy could also be attractive during this period due to higher cash yields.