Those who have worked in the financial arena for decades saw the potential for some big trouble this year in January when a massive spike in retail trading sent shares of video game retailer GameStop into the stratosphere in an incredible parabolic move caused by the massive short position that had been built on the company’s stock. The entire float, and then some, was sold short and when the retail buyers piled in, the stock exploded higher. That move was exacerbated by the short sellers being forced to buy shares to cover.

This kind of trading, combined with a ton of cash being thrown at the market for over a year, has moved everything into a very precarious situation. With inflation starting to hit hard, we are seeing ever more articles about how widespread shortages and production snags are driving up prices for an array of items, including cars, appliances, energy, food, cigarettes and medical care.

Fortunately, the economy is starting to open up and people are returning to work and also to play. That means vacation travel and spending. But the bottom line for investors, and we have said this for some time, is that it may be time to move to more defensive positions that pay dividends as we ride out what could be a substantial correction.

We screened the BofA Securities research database looking for companies that nervous investors can move to now that are all rated Buy at major Wall Street firms and all pay substantial and dependable dividends. It is important to remember, though, 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.

In an attempt to lower its large debt load, AT&T recently agreed to sell a stake in its pay-TV unit to private-equity firm TPG and carve out the struggling business, pulling the telecom giant back from a costly wager on entertainment. The transaction would move the DirecTV and AT&T TV services in the United States into a new entity that will be run jointly by the new partners. AT&T will retain a 70% stake in the business. TPG will pay $1.8 billion in cash for a 30% stake.

Investors receive a 6.47% dividend. BofA Securities has a $36 price target for the shares, which compares to the lower Wall Street consensus target of $29.97. AT&T stock closed trading on Tuesday at $32.26 a share.

This remains a solid pharmaceutical stock to own long term and offers among the best values now for investors. Bristol Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.

The company’s products include the following:

• Opdivo for anti-cancer indications
• Eliquis, an oral inhibitor targeted at stroke prevention in adult patients with non-valvular atrial fibrillation, and the prevention and treatment of venous thromboembolic disorders
• Orencia for adult patients with active RA and prostate-specific antigen, as well as reducing signs and symptoms in pediatric patients with active polyarticular juvenile idiopathic arthritis.

Shareholders receive a 3.03% dividend. BofA Securities has set its price target at $78. The consensus target is $75.44, and Bristol Myers Squibb stock closed at $64.26 on Tuesday.

Coca-Cola

This remains a top Warren Buffet holding and offers not only safety but also an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Investors receive a 3.06% dividend. The $60 BofA Securities price target is just higher than the $59.36 consensus target. Coca-Cola stock closed most recently at $54.32.

Many of the Wall Street firms that we cover are still very positive on utilities, and this company is highly rated. Dominion Energy Inc. (NYSE: D) is an American power and energy company that operates through the following four segments:

• The Dominion Energy Virginia segment generates, transmits and distributes regulated electricity to residential, commercial, industrial and governmental customers in Virginia and North Carolina.
• The Gas Distribution segment engages in the regulated natural gas gathering, transportation, distribution and sales activities, as well as distributes nonregulated renewable natural gas. This segment serves residential, commercial and industrial customers.
• The Dominion Energy South Carolina segment generates, transmits and distributes electricity and natural gas to residential, commercial and industrial customers in South Carolina.
• And the Contracted Assets segment is involved in the energy marketing and price risk activities.

As of December 31, 2020, Dominion Energy’s portfolio of assets included approximately 30.2 gigawatts of electric generating capacity; 10,500 miles of electric transmission lines; 85,600 miles of electric distribution lines; and 94,200 miles of gas distribution lines. It serves approximately 7 million customers. The company sells electricity at wholesale prices to rural electric cooperatives and municipalities, as well as into wholesale electricity markets.

Shareholders receive a 3.17% dividend. The BofA target price is $86, and the consensus target is $84.57. Tuesday’s last Dominion Energy stock trade was at $78.63 a share.

Exxon Mobil

Shares of this mega-cap energy leader have been on fire but still have big upside potential. 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.

The analysts said this about the industry giant after it posted strong earnings for the quarter:

Earnings beat versus our estimate was entirely on chemicals with margins at a 10 year high. Solid quarter with debt down $4 billion quarter-over-quarter, cost initiatives on track and with the announced sale of UK non-core assets. Retain Buy as ExxonMobil has invested through the cycle which positions it to expand its future free cash flow to support dividends and stock buybacks.

The company pays investors a huge 5.52% dividend, which will continue to be defended. BofA Securities has a $90 price target, which is much higher than the $63.28 consensus figure. Exxon Mobil stock last closed trading at $60.59 a share.

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While definitely the farthest ideas from the go-go momentum and mega-tech giants, these stocks pay dependable dividends and can soften the blow if we see a big sell-off in the next six months. Remember that sell in May and go away has been around for years, and there’s a reason. While not always correct, it has been many years, and it may indeed be the case this year, with its very frothy market.

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