A word that barely has been mentioned on Wall Street over the past few years is reentering the lexicon. It is a familiar one to long-time stock investors: inflation. One thing that is driving the narrative is the big spike in interest rates. While the headlines seem to be touting imminent doom, the fact of the matter is that the benchmark 10-year yield is at 1.52% and the 30-year bond yields a paltry 2.30%. That is still not that far from the generational lows we saw over the past year.
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While those who bought Treasury debt or lower-yielding investment-grade corporate debt over the past six months could be in big trouble as rates do move higher, income investors that prefer stocks with dependable dividends are still in a very sweet spot.

We reviewed the BofA Securities U.S. High Quality & Dividend Yield list for stocks rated Buy that pay a higher dividend than the 10-year and 30-year U.S. Treasuries, as well as the S&P 500 dividend yield, which is at a current 1.52%. We found five that have good prospects for the rest of 2021 and should continue to pay dependable dividends.

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

Emerson Electric

This stock has rallied nicely off the lows posted last year but still offers a solid entry point for investors. Emerson Electric Co. (NYSE: EMR) is a global technology and engineering company providing innovative solutions for customers in industrial, commercial and residential markets.

The company’s Automation Solutions business helps process, hybrid and discrete manufacturers maximize production, protect personnel and the environment while optimizing their energy and operating costs. The Commercial & Residential Solutions business helps ensure human comfort and health, protect food quality and safety, advance energy efficiency and create a sustainable infrastructure.

Shareholders receive a reasonable 2.31% dividend. BofA Securities has a $100 price target on the shares, while the Wall Street consensus target is $94. Emerson Electric stock closed on Thursday at $87.33 a share.

General Dynamics

This company, like other major defense prime contractors, had a solid 2020, and the balance of 2021 looks solid as well. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.

Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.

Investors in General Dynamics stock receive a 2.65% dividend. The BofA Securities price target is $200, and the consensus estimate is $167.67. The last trade on Thursday hit the tape at $166.20.

Johnson & Johnson

With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays. Johnson & Johnson (NYSE: JNJ) is one of the top market cap stocks in the health care sector and raised its dividend this year for the 56th consecutive year.

With everything from medical devices to over the counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street. And now its COVID-19 vaccine appears to be on the verge of a widespread launch.

The health care giant also has one of the most exciting pipelines of new drugs in the sector. That combined with the solid over-the-counter product business makes the stock an outstanding holding for conservative accounts with a long-term investment outlook. Johnson & Johnson generates a little over half of its sales in international markets, which are expected to see higher spending on health care over the next 10 years and beyond.

Shareholders receive a 2.48% dividend. The $175 BofA Securities price target is less than the $185.44 consensus target. Johnson & Johnson stock closed at $162.98 on Thursday.
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Procter & Gamble

The company offers a very solid dividend, which was raised by about 5% last year and should be raised again soon. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products companies. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn. Some of these are among the most valuable brands in the world.

The company sells its products through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, specialty beauty stores, high-frequency stores and pharmacies. The company has been very innovative in its product development process and uses that to help ensure future growth and cash flow. This should provide investors years of steady growth and dividends.

Shareholders receive a 2.50% dividend. BofA Securities has set a $161 price objective on Procter & Gamble stock. The consensus target price is $151.05, and shares ended Thursday’s trading at $126.58 apiece.

Packaging Corporation of America

This company should continue to do well especially as the economy opens up and improves. Packaging Corporation of America (NYSE: PKG) with about $6.7 billion in 2020 revenues, the company is the fourth-largest producer of containerboard and corrugated packaging products in the United States producing a wide range of corrugated products such as shipping boxes, point-of-sale packages and displays.

Packaging Corp of America operates six containerboard mills and two white paper mills. It also has approximately 100 corrugated product plants across the country and has more than 4.6 million tons of containerboard capacity.

Investors receive a 2.97% dividend. The BofA Securities analysts have a $150 price target. The $136 consensus target is closer to Thursday’s $133.57 per share closing print.

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Note that none of these is super high yielding, but with the companies being very safe equity investments, and investors having the ability to generate additional income through covered call writing, this is an alternative for those conservative investors dismayed by the low Treasury and bank certificate of deposit rates. Moreover, we have been warning that a correction could be on the horizon, which already may have started, so these are safe ideas to rotate to now.

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