Bank of America named the European companies whose stocks are expected to perform strongly in the face of a possible economic slowdown. It comes as growing signs indicate that the European economy could be heading for a prolonged period of recession. Preliminary data last week pointed to slower growth in business activity for the month of June, and earlier this month the eurozone group of nations reported a quarter-to-quarter contraction. the other, dragging it into a technical recession. Bank of America’s proprietary style cycle model also shows that the region is facing a “recession phase”. The model, which tracks the stages of the economy, indicates that the European economy is now down for the first time since the second quarter of 2020. In such an economic environment, Wall Street banking strategists said they favor the large companies seen as value over growth, high quality and low risk. The companies selected by the bank stand out because they are expected to offer high cash yields in the face of an impending recession. This means that they should provide investors with a steady flow of cash through dividends or redemptions, 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 a 12-month forward cash yield above the average of their respective sectors. Forward cash yield measures the amount of cash a company is expected to generate for its shareholders over the coming year relative to its current market price. Among the companies named by BofA are: KBC from Belgium, Intesa Sanpaolo and Eni from Italy, Nordea Bank from Finland, Repsol from Spain, Barclays and Aviva from the UK and BNP Paribas from France. These companies belong to the banking, energy and insurance categories, among others. Banking and insurance group KBC tops the list with a 12-month forward dividend yield of 8.1% and a total cash return of 14.2%, according to the bank’s forecast. Cash return also includes returns through redemptions. According to Paulina Strzelinska, quantitative strategist at Bank of America, the difference between corporate dividends and bond yields has turned negative for the first time since 2011. In other words, companies are now paying their shareholders more than investors can only earn bonds. This year alone, 133 new buyback programs have been announced, including 27 from banks, 15 from energy companies and 13 from industrials, according to Strzelinska’s June 21 client research note. Based on historical BofA data, specific sectors such as food, beverage and tobacco, healthcare, and personal and household goods stores have performed better during economic downturns. The investment banking strategist added that some cyclical sectors, such as autos, basic resources and energy, could also be attractive in this phase due to their higher cash yields.