With 2020 thankfully almost over, many investors are looking to next year. While there is some hope that a return to normal could be achieved by the summer, one thing is for sure: the stock market is very overbought and some of the momentum stock trades are very crowded and could be poised to get hit hard. With interest rates remaining at generational lows, top-quality dividend stocks may be the way to go for 2021.

Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2020 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. Keep in mind, just because they are on this list now doesn’t mean in the future they won’t be forced to reduce their dividend.

We decided to screen the Dividend Aristocrats list looking for companies in sectors that are in demand, or those in sectors that are perhaps out of favor but still look like good ideas for 2021. Five stocks hit our screens, all of which are Buy rated at top Wall Street firms. 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.

Investors receive a 7.32% dividend. BofA Securities team has a $36 price target for the shares, and the Wall Street consensus target is $31.14. AT&T stock closed on Wednesday at $28.75.

This is one of the top pharmaceutical stocks picks across Wall Street, and 34% of the fund managers own the shares. 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 in June of 2019 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. The purchase officially closed in May of this year.

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.

Shareholders receive a 5.03% dividend. Morgan Stanley recently lifted the $108 price target to $120. The consensus price target is lower at $115.71. AbbVie stock closed at $103.28 on Wednesday.

Exxon Mobil

This energy giant finally has been removed from the penalty box at Goldman Sachs, which recently upgraded the shares to Buy. 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.

In the report on the long-awaited upgrade to Buy, the analysts noted that Exxon has meaningfully cut its capital spending outlook for next year to a range of $17 billion to $19 billion, compared with an earlier estimate of between $30 billion and $35 billion. Its guidance for 2022 to 2025 is a range of $20 billion to $25 billion.

Exxon expects to exceed its initial guidance of a 15% reduction in cash operating expenses in 2020, due in part to a global workforce reduction of the same percentage point magnitude by the end of 2021.

Investors receive an 8.44% dividend, which probably will continue to be defended. The $52 Goldman Sachs price target is above the $47.98 consensus target. Exxon Mobil closed most recently at $41.77.

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.

Franklin Resources stock investors receive a 4.56% dividend. BofA Securities has set a $26 price target. The consensus target is $22.14, but shares closed above that level Wednesday at $24.74.

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.

Investors receive a 5.73% dividend. Seaport Global Securities has initiated coverage with a Buy rating and a $17 price target. That compares to the $13.21 consensus target. The shares ended Wednesday at $12.93.

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All five stocks have reasonable upside to the Wall Street targets, and they all come with at least a 4% dividend and that is very dependable. With even moderate appreciation in the shares 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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