Massive volatility, huge up and down market swings, recession fears, geopolitical fears, the election cycle in full swing. It’s almost more than most investors can take. However, with yields falling like a rock and, in some cases, to all-time lows, income and total return investors once again have to look to the equity markets for the ability to generate yield. With bond proxy stocks like utilities and real estate investment trusts at or close to fully valued, investors may need to look elsewhere.

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One place investors may want to look is the Jefferies dividend watch stocks that are based here at home. The Jefferies Microstrategy dividend watch portfolios may be a way for investors to get solid yields from stocks without paying big premiums. The Jefferies report noted this:

In an environment characterized by an adverse macro cycle and poor earnings visibility, cyclical dividend yield strategies could remain under pressure despite the historical low valuations. While we like bond-proxies as a theme in the current environment, they are at peak valuations. Instead we focus on shadow defensives, companies with defensive characteristics but trading at reasonable valuations The shadow defensives process is designed to remove various risks inherent in the high-yield universeves, companies with defensive characteristics but trading at reasonable valuations.

We screened the U.S. dividend watch portfolio, looking for the highest yielding companies, and while this may be a touch more aggressive than the entire aggregate portfolio, it may offer higher total return potential.

IBM

This blue chip giant still offers investors a very solid entry point. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.

IBM’s five major segments are: 1) Cognitive Solutions, 2) Global Business Services, 3) Technology Services & Cloud Platforms, 4) Systems and 5) Global Financing. Analysts cite the company’s potential in the public cloud as a reason for their positive outlook going forward. But note that IBM is among the big corporations with the most debt.

IBM shareholders receive a 4.84% dividend. The Wall Street consensus target price is $152.80, and shares closed Friday at $133.76.

Philip Morris

This company has continued to grow global market share and its stock makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the international cigarette/heated tobacco market. Key combustible brands include Parliament, L&M and Marlboro, one of the most valuable brands in the world.

The company is commercializing I-Qos portfolio, which is a heat-not-burn product, in over 40 markets. All of its sales are outside the United States. In the spring the FDA cleared the company to sell its heated tobacco product here in the United States. Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks and Marlboro Fresh Menthol Heatsticks will be available. Since Philip Morris operates overseas, Richmond, Virginia-based Altria will sell the products in the United States.

Shareholders receive a 5.37%% dividend. Analysts have a $96.22 consensus price target, and shares closed at $84.91 on Friday.

Phillips 66

This extremely diversified energy company has a long and successful operating history. Phillips 66 (NYSE: PSX) operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The company holds many of these assets within its master limited partnership, Phillips 66 Partners.

The company is able to benefit from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that aren’t ideal MLP assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.

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Phillips 66 investors receive a 3.64% dividend. The $118.36 consensus target compares with Friday’s close at $98.83 a share.

Verizon

This top telecommunications company offers tremendous value. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described most reliable wireless network, with 109.5 million retail connections nationwide.

Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide. Verizon is another of the most valuable brands in the world.

Verizon investors receive a 4.25% dividend. The consensus price target is $59.95. The stock closed most recently at $56.65.

Walgreens

This huge drugstore chain offers a safe retail play for investors now. Walgreens Boots Alliance Inc. (NASDAQ: WBA), following the completion of the Rite Aid stores acquisition, is the largest global pharmacy, with nearly 10,000 stores in the United States alone.

The company also operates an international pharmacy business primarily composed of the Boots pharmacies in the United Kingdom, and Alliance Healthcare, an international wholesaler and distributor of pharmaceutical and medical products in Europe. Walgreens is headquartered in Deerfield, Illinois.

Its dividend yield is 3.71%, and the consensus target price is $58.47. Shares were last seen at $50.48.

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These five top stocks from the Jefferies dividend watch basket not only are priced right but pay dependable dividends. We are clearly in a vulnerable market, and while the economy is still acting good, indicators have slowed, the August volatility and doldrums are upon us, and the geopolitical and domestic political arenas remain very volatile.

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