When pundits in the financial media warn that interest rates are going higher and to look out, longtime investors laugh and think back to the days before the financial crisis in 2007, when the 10-year Treasury bond had a yield over 5%. That bond now yields a paltry 0.90% and, after taxes and inflation, actually has a negative real-return yield.

So what are income-starved investors to do? One of the best ideas is to look for stocks that pay dependable dividends and have for years. We screened the BofA Securities research universe looking for companies that pay big dividends that look like they will remain safe. We found five that are rated Buy that make sense for investors looking to increase their income streams.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

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.

The third-quarter results showed solid subscriber growth in the company’s market focus areas of wireless and fiber broadband, while continuing to reflect strong cash flows, financial strength and business resiliency. AT&T also updated guidance and now expects 2020 free cash flow of $26 billion or higher, with a dividend payout ratio with a percentage in the high 50s.

AT&T also is currently accepting bids for the firm’s DirecTV stake, and while it will be a big loss, it will help the firm continue to cut expenses and get an albatross off the books.

Investors receive a 6.78% dividend. BofA Securities has a $36 price target for the shares, while the Wall Street consensus target is $31.36. AT&T stock closed trading on Thursday at $30.69.

This maker of tobacco products offers value investors a great entry point now and was hit recently as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro, one of the most valuable brands in the world.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders. In December 2018, the company acquired 35% of Juul Labs, and it has purchased a 45% stake in cannabis company Cronus for $1.8 billion. With numerous states passing legislation in November legalizing medical and adult recreational marijuana use, that play is making more sense.

Shareholders now receive an 8.00% dividend. The BofA Securities price target is $50, and the consensus target is $47.46. Altria stock closed at $42.895 on Thursday.

Energy Transfer

The top master limited partnership (MLP) is a very safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

This publicly traded limited partnership has core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGLs) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.

Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco, and the general partner interests and 39.7 million common units of USA Compression Partners.

Energy Transfer investors finally received the long-anticipated distribution cut in late October, which was a stunning 50%. However, at $0.61 per unit, investors are still paid 8.94%. The $11 BofA Securities price target compares to the $9.95 consensus and Thursday’s close at $6.82 a share.

This Wall Street favorite is a very solid energy play for more conservative investors. Valero Energy Corp. (NYSE: VLO) is one of the largest independent petroleum refining and marketing companies in the United States. It is based in San Antonio, Texas; owns 13 refineries in the United States, Canada and Europe; and has a total throughput capacity of around 2.5 million barrels per day.

Valero also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant.

Valero sells its products in the wholesale rack or bulk markets in the United States, Canada, the United Kingdom, Ireland and Latin America. Approximately 7,400 outlets carry Valero’s brand names.

Valero Energy stock investors receive a 6.55% dividend. The very bullish BofA Securities analysts have a $75 price target. The consensus target is lower at $61.28, and shares were last trading at $59.87.

W.P. Carey

This is a large net lease real estate investment trust (REIT) with an incredible distribution for income buyers. W.P. Carey Inc. (NYSE: WPC) ranks among the largest net lease REITs, with an enterprise value of approximately $17 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,163 net lease properties covering approximately 131 million square feet.

For over four decades, the company has invested in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. Its portfolio is located primarily in the United States and northern and western Europe, and it is well diversified by tenant, property type, geographic location and tenant industry.

While real estate is struggling somewhat now, net lease REITs generally rent properties with long-term leases (10 to 25 years) to high credit-quality tenants, usually in the retail and restaurant spaces. “Net lease” refers to the triple-net lease structure, whereby tenants pay all expenses related to property management: property taxes, insurance and maintenance.

Investors receive a 6.09% distribution. BofA Securities has set a $77 price target. The consensus target is $76, and W.P. Carey stock closed most recently at $68.59.

Note that any of or all these companies could at one point cut their dividends. With that in mind, investors have a chance to buy all five at discount pricing with huge dividends payouts. Even if recovery in the share prices takes a while, the high dividends will make the wait more than tolerable. Investors should also remember that MLPs and REITs have distributions that may contain return of principal.

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