All of the investment companies and banks that we follow here at 24/7 Wall St. keep a list for their institutional and retail clients of high conviction stock picks. These are generally the companies they not only like on a longer-term basis, but stocks that usually have solid upside to the assigned target price. Since the beginning of the year, many of these top Wall Street firms have tweaked their lists of top stocks to buy regularly to account for continued changes in 2022. So with lots of second-quarter earnings still pouring in, we decided to screen the Jefferies Franchise List of top stock picks looking for those that pay the biggest dividends and are analyst favorites.
Five stocks hit our screen, and despite the massive July rally, it probably makes sense for investors to take a cautious stance for the rest of the year. All of these companies fit the bill. While all are rated Buy at Jefferies, remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Bloomin’ Brands
Chances are good you have had a meal at one of this company’s very popular restaurants. Bloomin’ Brands, Inc. (NASDAQ: BLMN) through its subsidiaries, owns and operates casual, upscale casual, and fine-dining restaurants in the United States and internationally.
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Bloomin’ Brands operates through two segments, U.S. and international. Its restaurant portfolio has four concepts: Outback Steakhouse, a casual steakhouse restaurant; Carrabba’s Italian Grill, a casual Italian restaurant; Bonefish Grill; and Fleming’s Prime Steakhouse & Wine Bar, a contemporary steakhouse. As of Dec. 26, 2021, the company owned and operated 1,013 full-service restaurants and franchised 157 restaurants in 47 states; and 156 full-service restaurants and franchised 172 restaurants across 17 countries and Guam.
The company posted very solid second-quarter results that beat on earnings and revenue estimates, and it raised its revenue outlook, while profit guidance came in below expectations.
Investors can dine on a solid 2.75% dividend. The Jefferies target price is posted at $36, while the consensus target across Wall Street is set at $27.70. The last trade Monday was reported at $20.49.
The Blackstone Group L.P.
This top money management company makes solid sense for more aggressive growth and income investors. The Blackstone Group L.P. (NYSE: BX | BX Price Prediction) is one of the largest global alternative asset managers. Blackstone manages investments and provides services across four operating segments: private equity, real estate, credit, and hedge fund solutions.
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Blackstone also launches and manages private equity funds, real estate funds, funds of hedge funds, and credit-focused funds for its clients. It invests in private equity, public equity, fixed income, and alternative investment markets.
Despite beating earnings estimates and increasing assets under management, the shares have slumped this year. With investors being paid a very rich 4.47% dividend, and Jefferies having a big $155 price target, which compares with a lower $121 consensus and a $103.24 Monday close, this looks like an outstanding total return play.
Freeport-McMoRan
This company is one of the top picks across Wall Street in the sector and an outside way to play the electric-vehicle trend. Freeport-McMoran Inc. (NYSE: FCX) is the world’s largest publicly traded copper and moly producer, and the eighth-largest gold producer. Its key operating and development assets are in Indonesia, North America, South America, and Africa.
Highly leveraged toward copper mining, the company could be a big player in a scenario of rebuilding and repairing old and battered projects and would clearly benefit from stronger demand and higher prices for industrial commodities.
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Many across Wall Street see significant further upside potential to commodity prices over the next one to three years. This is because of accelerating demand growth ex-China and supply constraints. Top analysts believe that this cycle is in very early stages as key demand drivers should continue to grow. With copper rebounding recently, and the shares at a very reasonable entry point, those looking for commodity ideas could do well with this market leader.
Investors are paid a decent 1.90% dividend. The Jefferies price target objective is posted at $58 that compares with the lower $38.51 consensus and Monday’s closing print of $29.98 down 5%.
Newell Brands
This top consumer goods stock is a safe play for investors worried about a toppy market and has backed up recently. Newell Brands Inc. (NYSE: NWL) is a manufacturer and marketer of consumer products, with six reporting segments: writing (Sharpie, Paper Mate, Waterman, Parker); home solutions (Rubbermaid, Calphalon, Goody); tools (Irwin, Lenox); commercial products (Rubbermaid Commercial Products, Rubbermaid Healthcare); baby and parenting (Graco, Aprica); and Jarden (with 120 brands including Yankee Candle, Jostens, Oster, Sunbeam, Mr. Coffee, K2, Marmot, Rawlings, Coleman, and First Alert).
Consumer staples stocks such as Newell tend to be solid ideas in times of inflation and rising rates. Last year the company’s cash distributions to shareholders were close to $400 million. During the same period, Newell produced roughly $600 million, which included an abnormally large $350 million in cash spent on an inventory buildup, which the company attributed to preparation for sales growth. With a dividend payout ratio below 70%, Newell should continue to easily support the large and tempting dividend.
While Newell posted mixed second-quarter results (earnings did top estimates), and lowered its fiscal 2022 outlook, the company’s solid assortment of always-needed products makes it an ideal idea if the going gets rough again.
Newell shareholders are paid an outstanding 4.55% dividend. The analysts have a $28 price target, while the consensus across Wall Street is set just lower at $26.10 The shares were last seen Monday at $20.28.
Webster Financial
This is an off-the-radar idea in financial services that could be a big winner in a rising interest-rate environment. Webster Financial Corporation (NYSE: WBS) operates as the bank-holding company for Webster Bank, N.A., that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States.
The company operates through three segments: commercial banking, HSA Bank, and retail banking. The commercial banking unit provides lending, deposit, and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators, and consumers; and trust, asset management, financial planning, insurance, retirement, and investment products.
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The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants, and financial advisors. The retail banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers. The company also offers online and mobile banking services. As of Dec. 31, 2021, it operated 130 banking centers and 251 ATMs.
The stock has been rocked recently despite posting very good second-quarter results that topped analysts’ expectations. Bears pointed to rising expenses, but the reality is this is a cheap and sensible buy in a sector that relishes rising interest rates.
Investors are paid a very solid 3.44% dividend. The Jefferies analysts have a $55 target price that is versus the slightly higher $60.56 consensus target. The shares closed Monday at $46.19.
While none of these stocks will be making any massive parabolic moves higher soon, they are safer ideas for nervous investors concerned about the potential for inflation to wreak havoc on the economy the rest of 2022. The July rally has been a pleasant surprise for beleaguered investors, but earnings are dropping, inventories are bloated, and inflation is still the highest in 40 years. Nobody ever went broke playing it safe in times of stress.
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