It was nice while it lasted, but the “melt-up” rally we enjoyed from the mid-March lows could be close to over. The market has rallied a stunning 40% from the lows, and many stocks, especially those of technology momentum companies, are actually sitting at 52-week highs. While there are still mountains of cash sitting in money markets and savings accounts, rather than being ammo for a continued march higher, those funds may stay there as investors seek safe havens.

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Given that bond yields are still very unattractive, we decided to look at the sectors that have underperformed during the rally for solid and safe large-cap leaders that pay dependable dividends in the financial and energy sectors. Both have trailed technology and the overall market in a big way.

We screened the BofA Securities research universe looking for companies in those two sectors that look like good ideas for investors worried about a market that is very overbought. These five stocks stood out, and all are rated Buy at the firm.

Chevron

This integrated leader is a safer way for investors looking to be positioned in the energy sector. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals. The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas.

Chevron, which is among the companies with the largest corporate debt, recently became the latest major oil company to slash spending after halting its $5 billion-a-year share buyback and halving spending in the Permian Basin, which means a large decrease in projected output from America’s biggest shale region.

The California-based oil giant has said that it would lower projected 2020 capital spending by 20%, or $4 billion. The Permian will account for the largest single element of that reduction, translating into 125,000 fewer barrels of oil equivalent per day than previously forecast, a quantity equal to about 2.5% of the basin’s total current production.

The analysts are positive and noted this after earnings:

Chevron earnings beat reflects operational momentum, but we see stress tested guidance as the key takeaway from the quarter. With uncertainty ahead, Chevron top in class balance sheet and capital flexibility stand out, w/ $30 billion in liquidity to navigate a downturn. New guidance on sustaining capital – below our prior estimate, raises our price objective. Retain Buy as a top defensive name.

Shareholders receive a 5.36% dividend, which the analysts feel will remain at current levels. BofA Securities recently raised its price target on the shares to $97. The Wall Street consensus target is $97 as well. Chevron stock ended Thursday’s trading at $96.28.

Citigroup

Shares of this top bank are trading at the lowest levels since 2016. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a still very cheap 7.2 times estimated 2020 earnings, this one looks very reasonable in what remains a volatile stock market.

Citigroup stockholders receive a 3.67% dividend. The BofA Securities price target is $57, while the consensus target is up at $62.23. Shares closed trading Thursday up over 4% to $55.65.

Exxon

This is another safer long-term play for conservative investors, and the energy giant is trading at 17-year lows. 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.

Earlier this year Exxon announced plans for spending cuts amid the coronavirus outbreak that caused a price slide significantly aggravated by Saudi Arabia’s decision to start raising oil production. Exxon’s budget for this year and every year until 2025 was set at between $30 billion and $35 billion. Many on Wall Street feel that could be cut 10% to 20% or more. Note that Exxon has one of the highest paid American CEOs.

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The analysts remain very positive:

Despite some confusion on the company’s reported earnings, we contend that on a peer to peer comparison the first quarter is a clean beat versus the street. COVID-19 is the great equalizer. All majors will lean on the balance sheets, but Exxon can reduce spending as needed with growth in the recovery. The second quarter promises more sticker shock but Exxon’s yield pays investors to wait through this downturn with growth beyond.

Exxon Mobil stock comes with a huge 7.09% dividend, which probably will be defended. The $70 BofA Securities price target is higher than the $50 consensus target. Thursday’s last trade hit the tape at $49.10.

Marathon Petroleum

This is another solid way for more conservative accounts to play the energy sector. Marathon Petroleum Corp. (NYSE: MPC) is currently one of the largest independent petroleum refining and marketing companies in the United States. It operates approximately 2,750 retail sites under the Marathon and Speedway brands. In addition, the company operates a logistics network of pipelines, barges, trucks and terminals that store and transport crude and products.

Despite a plan to spin-off Speedway, the company announced in late February a plan to invest $550 million in the chain. The investment will focus primarily on converting convenience stores the company added to its portfolio through several acquisitions over the past two years, notably, the strategic combination with San Antonio-based Andeavor in the fall of 2018, to Speedway’s branding and systems.

First-quarter results were solid and the analyst said this:

First quarter with new CEO Hennigan sees free cash flow right sized to cover a sector leading dividend yield (7%). While proposed as a response to COVID-19, the ongoing review may have longer term implications. Top refining pick: deep value with underappreciated cash flow capacity and refining leverage from an advantaged system.

Shareholders receive a 6.10% dividend, though it may be trimmed. The BofA Securities price target is a whopping $61. The consensus target is much lower at $46.07, and Marathon Petroleum stock was last seen trading at $38.04 per share.

Royal Bank of Canada

The financials have had a rough go of it, but this play is a solid way to be involved. Royal Bank of Canada (NYSE: RY) is the largest Canadian bank by market capitalization. It has 1,200 branches across Canada and is first or second across virtually all product lines in terms of market share on the retail front.

Management has built out a sizable global wholesale operation and, as a result, is deriving a larger proportion of its earnings from wholesale businesses than has been typical. Royal Bank of Canada has been fairly inactive on the acquisition front over the past several years.

The company recently posted solid fiscal second-quarter results, and the analysts said this:

Second quarter results highlighted the bank’s strong capital position and earnings power…further cementing its best-in-class status. We revise our EPS estimates 2020 to $6.50 from $7.64; 2021 to $7.08 from $6.50 with our expectations for elevated provisions for credit losses in the first half of 2021, We expect stock outperformance to continue given Royal Bank of Canada solid competitive positioning, a continued quality bias among investors.

Investors receive a 4.50% dividend. BofA Securities has set a $74 price target. The posted consensus target is $88.84, and Royal Bank of Canada stock closed Thursday at $70.44.

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These five great stocks to buy all pay good dividends and offer a touch more stability than high-flying momentum stocks. If the markets give back some of the big gains from the past two months, everything could possibly trade lower, but these offer a better opportunity for nervous investors now, especially with an improving economy on the horizon.

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