Well, the Chinese appear to have backed the Federal Reserve into a corner, and with our economy sputtering along at a very tepid rate, future increases in the fed funds rate not only look out of the question for this year, they may remain out of the question through 2017. With the Chinese currency pegged to the U.S. dollar, any increase in rates could send the Chinese into devaluation mode, which could prove awful for world financial markets.

So, now that the bad news is over, here is some good news. Some very safe dividend stocks, from sectors that are performing well now, make outstanding buys for income investors looking for safety. We screened for consumer staples, utilities and telecommunications stocks that make sense now in our Wall Street research database. Four look like outstanding choices.

AEP

American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the country. AEP also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

Many on Wall Street feel that the stock trades at a discount to its utility peers and should deserve a premium. Some top analysts think the company will sell generating assets and buy back shares with the proceeds, which will be accretive.

AEP is rated Buy at Merrill Lynch, and shareholders receive a 3.65% dividend. The Merrill Lynch price target is $62 but could be moved higher. The Thomson/First Call consensus target is $63.55. Shares closed on Thursday at $61.31.

AT&T

AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

While shares trade at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic, but increased device financing plans.

The company announced recently it is working with Salesforce.com to connect Internet of Things data from AT&T’s solutions into Salesforce’s Customer Success Platform. By connecting AT&T M2X into Salesforce’s Service Cloud, companies can automatically create and route service requests, cases or tickets through pre-built workflows.

While fourth-quarter earnings were in line with forecasts and slightly below the Wall Street estimates, a change in accounting for the entertainment group lowered revenue/EBITDA by $300 million for the quarter. The analysts noted that this knocked $0.03 off the bottom line numbers. So all in all, a solid quarter, and another reason for conservative accounts to own the stock, especially with solid DirecTV additions and mid-single-digit earnings growth estimated for 2016.

AT&T investors receive a huge 5.3% dividend. Jefferies has a $40 price target for the Buy-rated stock, and the consensus target is $37.42. Shares closed Thursday at $36.21.
Altria

Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and the company’s Marlboro brand remains one of the most recognizable in the world. Many Wall Street analysts concede that the stock has solid downside support owing to the generous dividend yield, which remains at a huge premium in relation to the 10-year Treasury rate. Cash flow generation and the return of cash to Altria shareholders remain key facets of the company’s total shareholder return, and the analysts expect support of the strong dividend, which they believe will continue to climb, and strong share repurchase activity.

To diversify away from cigarettes and cigars, Altria has expanded its portfolio into new categories like wine, e-cigarettes and a 27% stake in brewer SABMiller, which together generated nearly 10% of its pre-excise tax revenue last quarter. With SABMiller being acquired, Altria will have a huge stake in the world’s biggest beer company.

While fourth-quarter earnings came in slightly below estimates for the first time in almost two years, the company expects 2016 full-year adjusted diluted earnings per share to be $3.00 to $3.05, which excludes the restructuring charges of approximately $0.05 per share. This is positive growth, and solid in an otherwise low growth world.

Altria investors receive a 3.77% dividend. The stock is rated Buy at Merrill Lynch, with a $66 price target. The consensus price objective is $65.14. The stock closed Thursday at $59.99.

PepsiCo

PepsiCo Inc. (NYSE: PEP) products are enjoyed by consumers a billion times a day in more than 200 countries and territories around the world. PepsiCo generates consistent outstanding revenue, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. Its product portfolio includes 22 brands that generate more than $1 billion each in estimated annual retail sales.

The company released solid fourth-quarter results, as higher sales of snacks and non-fizzy beverages in North America helped reduce the impact of a strong dollar. PepsiCo increased its annual dividend to $3.01 per share from $2.81 and said it would return about $7 billion to shareholders this year, with about $3 billion through buybacks. However, the company forecast 2016 adjusted earnings below many analyst estimates, citing a strong dollar and the exclusion of its Venezuelan business from its financial statements. While this is a short-term headwind, the stock still makes good sense for conservative accounts.

PepsiCo investors receive a 3.12% dividend after the new increase. The $105 Merrill Lynch price target is in line with the $105.43 consensus estimate. The stock closed most recently at $96.90.

These stock picks make a ton of sense for investors who want to stay long the equity markets and need income, but who are worried about the current market status. Rotating from higher beta and volatility momentum companies to these solid dividend-paying growth companies is a good move now.

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