Welcome to my video presentation for Friday, July 23. My accompanying article elaborates on the video’s themes. Below, I also steer you toward a trading tactic that investors should deploy now.

The COVID Delta variant has a lot of people rattled. So why are stocks continuing to rally? Robust earnings growth is one major reason.

The S&P 500 is currently reporting the highest year-over-year growth in earnings since the fourth quarter of 2009, when the global economy was crawling out of the trough of the Great Recession.

The analyst consensus is for double-digit earnings growth for the second half of 2021. Admittedly, these above-average growth rates stem in part from abnormally low baselines during the worst of the pandemic-induced economic slump last year, but the numbers are nonetheless encouraging.

As of today, more S&P 500 companies are beating earnings per share (EPS) estimates for the second quarter than average and beating EPS estimates by a wider margin than average. That’s according to research firm FactSet, which is the data provider for Investing Daily. Take a look at the following chart:

The blended earnings growth rate for the second quarter is 69.3% as of today, compared to an expected earnings growth rate of 63.3% at the end of the second quarter, on June 30. “Blended” combines actual results for companies that have reported and estimated results for companies that have yet to report.

Positive earnings surprises reported by companies in the financials sector, led by the big banks, are a major factor for the big improvement in overall earnings for the S&P 500, as the second chart shows. (Note: energy’s numbers in this chart are still to be determined by FactSet, due to the sector’s epic collapse in 2020.)

If 69.3% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth reported by the index since the fourth quarter of 2009, at 109.1%.

To date, 90% of S&P 500 companies have reported actual revenues above estimates, which far exceeds the five-year average of 65%. If 90% turns out to be the final percentage for the quarter, it will represent the highest percentage of S&P 500 companies reporting a positive revenue surprise since FactSet began tracking this metric in 2008 (see chart).

Worried about the direction of the economy under COVID risks? Remember this simple financial fact: Stock prices are forward-looking, meaning they’re a bet on future corporate profits. Those profits don’t always form a perfect correlation with economic growth, but even on that score, we enjoy tailwinds.

Read This Story: The COVID Delta Scare: Investment Moves to Make Now

U.S. gross domestic product (GDP) increased at an annual rate of 6.4% in the first quarter of 2021, according to the Bureau of Economic Analysis (BEA). That’s the fastest rate of year-over-year GDP growth since 1984, during the much-ballyhooed “Reagan boom.”

The BEA currently expects U.S. GDP in the second quarter to grow at a pace of 10%, with growth for 2021 to come in between 6% and 7%. The Organisation of Economic Cooperation and Development recently estimated that the global economy would grow 5.8% in 2021.

Economists expect China’s GDP to expand at the blistering pace of 8.2% in 2021, a forecast that was underscored by Beijing’s recent moves to loosen the monetary spigot.

A tailwind for China and other national economies is the global public works spending boom. Make sure your portfolio is diversified not only by asset class and sector, but also by geographic region.

Equity valuations are high right now, but they seem warranted by fast economic and corporate earnings growth. This bull market still has room to run.

That said, if you’re looking to mitigate risk, consider increasing your exposure to high-quality dividend stocks. You don’t have to be an income investor to love dividend-paying stocks.

Dividend-payers are time-proven vehicles for long-term wealth building, but they’re also safe harbors in turbulent seas because companies with robust and rising dividends by definition boast the strongest fundamentals. For our list of the best high-yielders, click here.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to his video channel, follow this link.