We have covered the Dividend Aristocrats stocks for years here at 24/7 Wall St. So it was kind of a seismic shock back in the spring when AT&T, a long-time charter member of the list, announced it would be cutting its cherished dividend. While it probably should have happened years ago as the company loaded up on debt to acquire DirecTV and Warner Media, the inevitable has arrived and this will be the last year for the stock to be on the prestigious list.

Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 65 companies that made the cut for the 2021 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further, with the following attributes also mandatory for membership on the Dividend Aristocrats list:

• Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
• Average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.

With the potential for a sizable correction looming, and interest rates at the lowest levels since February, we thought it would be a good idea to look for companies on the Dividend Aristocrats list that are in sectors poised to do well for the rest of 2021. Five stocks hit our screens that 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.

AbbVie

This is one of the top pharmaceutical stock picks across Wall Street, and 34% of 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 last 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 rich 4.48% dividend. SVB Leerink has a Wall Street high price target of $144. The Wall Street consensus target is just $124.08 a share. AbbVie stock closed trading on Tuesday at $116.05.

This mega-cap energy leader has been on fire, and with people hitting the road for the summer, there could be some big gasoline consumption. 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.

BofA Securities said this about the company after it posted strong earnings for the first 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 6.22% dividend, which will continue to be defended. The huge BofA Securities $90 price target is well above the $66.34 consensus figure. Exxon Mobil stock closed at $55.96 on Tuesday.

IBM

This old-school tech giant still offers investors a very solid entry point. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions.

The company integrates its hardware products with its software and services offerings in order to provide high-value solutions. Analysts have cited the company’s potential in the public cloud as a reason for their positive outlook going forward.

The company posted solid second-quarter results this week. The cloud proved to be big in the earnings reports, as did Red Hat, the software giant the firm bought in 2019. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise and sales leadership in more than 175 countries.

IBM stock investors receive a 4.69% dividend. The analysts at BofA Securities reiterated their Buy rating after the stellar earnings report and raised the price target to $176. The $144.12 consensus target is much closer to Tuesday’s closing print of $139.97.

This is an ideal stock for growth and income investors looking for a safer idea for the rest of 2021. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a real estate investment trust, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants.

To date, the company has declared 604 consecutive common stock monthly dividends throughout its 51-year operating history and increased the dividend 108 times since its public listing in 1994.

Investors receive a 4.02% distribution. The $84 Goldman Sachs price target compares with the $75.17 consensus target and a $70.25 close on Tuesday.

Walgreens

This huge drugstore chain is a safe retail play for investors now. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.

The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services. This segment operates nearly 10,000 U.S. retail stores under the Walgreens and Duane Reade brands and six specialty pharmacies.

The Retail Pharmacy International segment sells prescription drugs, as well as health and wellness, beauty, personal care and other consumer products, through its pharmacy-led health and beauty stores and optical practices, as well as online and via an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides and Ahumada banners in the United Kingdom, Thailand, Norway, the Republic of Ireland, the Netherlands, Mexico, and Chile. It also has 550 optical practices, including 165 on a franchise basis.

The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.

The dividend yield is 4.15%. Baird has set a $68 price target. The posted consensus target is $53.33, and Walgreens Boots Alliance stock closed at $46.06 a share on Tuesday.

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Keep this in mind: just because these companies are on this prestigious list now doesn’t mean in the future they won’t be forced to reduce their dividends, as evidenced by AT&T. Still, there is a very good chance that all these members will be on the list in 2022.

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