It’s time to look at quality and dividend growth stocks, rather than traditional safeguards, to deal with greater volatility ahead, according to BMO Capital. The market is experiencing its worst day since June 2020, with the S&P 500 index falling more than 4% on Tuesday due to hotter-than-expected US inflation data. Stocks have been under pressure all year as fears of high inflation, rising interest rates and an economic downturn prompted traders to dump shares. Those attached to stocks are turning more to defensive sectors, such as consumer staples and utilities, to deal with uncertainty. However, BMO Capital has several other recommendations for investors to protect and grow their portfolios. “[We] argues that there are better ways to hedge against price swings and volatility than piling up on protections,” BMO Capital’s Brian Belski wrote in a note Tuesday. Indeed, we want to focus on High Quality and Dividend Growth, which has already recorded solid returns during the rise, and Belski added. earnings since 1990, when the S&P 500 fell more than 10% year-over-year, BMO’s dividend growth and premium quality have fallen by just 6.4% and 1.1%, respectively. According to the note over the time period and the broader market fell an average of 21.4%. At the same time, these stocks have fundamental qualities that are always attractive for long-term growth, according to the company. “High-quality and dividend growth indicates higher ROE, better LTM earnings growth, and superior dividend growth on both a post-and-before basis when compared to their defensive counterparts, characteristics which we believe is important when it comes to consistency of long-term performance,” reads the note. BMO has screened high-quality stocks in the S&P 500 that have low volatility in earnings growth per share relative to the broader market, high cash levels, and return on equity high property. The company also looks for stocks that have a higher dividend yield than the benchmark index and have not had a dividend cut in the past five years. Here are 10 high quality and dividend growth names. Costco is a high-quality option that has performed better this year, down only about 10%, compared with a 17% drop for the S&P 500. Retail supply rose 6.6% this quarter. High-quality names Texas Instruments are down about 12% this year. Semiconductor stocks are also outperforming the broader market this quarter, up 7.4% during that time. ConocoPhillips is a dividend growth option highlighted by the BMO. Energy supplies have increased 60% this year due to higher oil and gas prices, and this quarter alone has increased 29%. Other names on this list are Microsoft, Cognizant Technology, Discover Financial Services and TJX Enterprises.