The higher the market goes, the harder it becomes. The quest to find new or better equity investment ideas in a market where all-time highs are being pounded out routinely is becoming a challenge. It’s even more of a challenge for active portfolio managers, who continue to be hammered on performance by passive management.

We decided to have another look at one of our favorite groups of stocks, the Dividend Aristocrats. These are S&P 500 companies that have boosted their annual dividend distributions for at least the past 25 consecutive years and meet certain additional requirements regarding market capitalization, liquidity and trading volume.

Figuring that total return ultimately will be a big factor in portfolio performance this year, we screened the 64 Dividend Aristocrat stocks for the five highest yielding. These look like solid ideas for the rest of 2020 and beyond.

AT&T

This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.

While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.

Merrill Lynch noted this when discussing the 2020 potential for the communications giant:

Our price objective is based on a P/E multiple of 12 times our fiscal year 2020 EPS estimate, which is in the middle of AT&T’s historical relative multiple range vs the S&P 500. We think this is warranted based on challenging operating trends within AT&T’s television business, higher leverage, and integration risk, but offset by higher earnings estimates and faster growth after baking in the impact of the company’s stock buyback and cost savings initiative.

Investors receive a 5.44% dividend. Merrill Lynch has a Buy rating and a $43 price objective on the stock. The Wall Street consensus target is $39.43. AT&T stock closed trading at $38.26 on Tuesday.

AbbVie

This is one of the top health care stock picks across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.

One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so last June it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth.

AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge. But with new applications being discovered for Humira, and the strength of Allergan’s portfolio, the stock is a solid play now.

Shareholders receive a 5.04% dividend. Mizhou’s Buy rating comes with a $104 price target, which is above the $100.42 consensus target. AbbVie stock closed on Tuesday at $93.61.

Exxon

This remains a top Wall Street energy pick and is a safer long-term play for conservative investors. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products. Note that Exxon has one of the highest paid American CEOs.

Exxon reported mixed fourth-quarter results that did have some positive trends, and while earnings came in slightly below estimates, revenues exceeded them. One issue that has kept some pressure on the shares is concern that the long-standing dividend may be cut. Merrill Lynch doesn’t agree and noted this recently:

Suggestions that Exxon’s dividend is at risk misunderstands a decade long strategy of investing at the low end of the cycle. Its sector leading balance sheet is considered strategic and stands best in class despite any borrowings to fund future growth. The company remains the only major with line of sight for a material expansion in cash/flow and dividend growth through the decade.

The company raised the dividend last year $.05 per share to $0.87 per share. That now translates to a massive 5.81% dividend. The $100 Merrill Lynch price objective compares with the $74.10 consensus figure. Exxon Mobil stock closed most recently at $59.88.

Franklin Resources

This company is a mutual fund powerhouse and continues to grow its huge asset base. Franklin Resources Inc. (NYSE: BEN) is among the largest and most global managers. At times, 50% of its sales are from outside the United States, an advantage given a maturing U.S. market.

Franklin Resources offers its products and services under the brands of Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2, LibertyShares, and Edinburgh Partners.

The continuing bull market has proven to be a solid tailwind for the company, and while withdrawals from baby boomers may be a concern, the path forward looks solid. The company reported fourth-quarter earnings that came in above expectations, driven by controlled expenses, although revenues were light and outflows were elevated.

Furthermore, the company announced this week it is buying Legg Mason, which gives it additional assets under management now totaling close to $1.8 trillion.

Franklin Resources offers shareholders a 4.15% dividend. Oddly, despite the company’s size and solid balance sheet, no Wall Street firm has a Buy rating. The shares closed on Tuesday at $26.05, above the $24.85 consensus target.

People’s United Financial

This off-the-radar financial institution looks to be offering investors huge value at current trading levels. People’s United Financial Inc. (NASDAQ: PBCT) is a bank and financial holding company. It engages in the provision of commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers.

The Commercial Banking segment consists of commercial real estate lending, commercial and industrial lending and commercial deposit gathering activities. The Retail Banking segment comprises consumer lending and consumer deposit gathering activities, as well as merchant services.

The Treasury segment covers the securities portfolio, short-term investments, brokered deposits, wholesale borrowings and the funding center.

The dividend yield is 4.43%. A $17.50 price target accompanies D.A. Davidson’s Neutral rating. The consensus target is $17.40, and the shares closed at $16.03.

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These stocks have sizable upside to the Wall Street targets. They all pay at least a 4% dividend, and very dependable dividends at that. With even moderate appreciation in the share prices of these top companies, investors should be looking at double-digit total return potential. In a market that is very long in the tooth, that makes sense now.

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