Since the lows in March of 2020, the stock market has doubled. Think about that for a moment. The S&P 500 closed at 2,237 on March 23 of that year and closed Tuesday at 4,486, just over an incredible 100% gain in 17 months. Numerous reasons for this have been cited, including the incredibly loose monetary policy that has been in place for years but went nuclear when COVID-19 showed up in the winter of 2020. Toss in the Reddit, WallStreetBets crowd, which had government hand-outs to trade with while locked at home, and you had all the ingredients for the proverbial melt-up.
The truly scary situation for investors is that the market has not had a 5% correction in almost a year, which is very unusual. The difficult question for investors is what to do now. Sell everything and go to cash? That would be a great idea if money markets paid anything. The highest yielding money market savings account pays a lousy 0.40%. Banks literally pay almost zero for funds held in checking accounts.
One idea for those worried about a massive sell-off is to move to safe stocks that pay dividends. While they will not be immune to a risk-off move, the chances are good they will hold up better than crowded technology or meme stocks. We screened our 24/7 Wall St. research database and found five outstanding stocks that investors can buy now that come with at least a 5% dividend, and all are rated Buy at major 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.
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Altria
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 | MO Price Prediction) 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.
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.
The company is also rolling out its own heated and vapor products, such as Marlboro HeatSticks and IQOS, both of which are slowly expanding across the country.
Altria has increased its dividend for 50 consecutive years. Shareholders now receive a 7.14% dividend. BofA Securities has a $58 price target on the shares, and the consensus target is $54.68. Altria stock closed on Tuesday at $48.21 a share.
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Exxon
Oil stocks have been hit hard as the black gold has slipped in price recently, providing investors a solid entry point for this industry leader. 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 company pays investors a 6.29% dividend, which will continue to be defended. The BofA Securities price target is $90, but the consensus target is much lower at $66.28. Exxon Mobil stock closed at $55.36 on Tuesday.
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New York Community Bancorp
This off-the-radar company pays a huge dividend and is an attractive idea for investors also looking to own financials now. New York Community Bancorp Inc. (NYSE: NYCB) operates as the bank holding company for New York Community Bank, which provides banking products and services in New York, New Jersey, Ohio, Florida and Arizona.
The company accepts various deposit products, such as interest-bearing checking and money market, savings, non-interest-bearing and individual retirement accounts, as well as certificates of deposit. Its loan products include multifamily loans; commercial real estate loans; specialty finance loans and leases; and commercial and industrial loans; acquisition, development and construction loans; one-to-four family loans; and consumer loans.
The company also offers annuities, life and long-term care insurance products and mutual funds; cash management products; and online, mobile and phone banking services. It primarily serves individuals, small and midsize businesses, and professional associations through a network of 237 community bank branches and 340 ATM locations.
Shareholders receive a 5.44% dividend. The $16 B. Riley Securities price target for New York Community Bancorp stock compares with a $15.07 consensus target and Friday’s closing print of $12.50.
PPL
This top utility delivers big dividends. PPL Corp. (NYSE: PPL) serves approximately 425,000 electric and 332,000 natural gas customers in Louisville and adjacent areas in Kentucky; 536,000 electric customers in central, southeastern and western Kentucky; and 28,000 electric customers in five counties in southwestern Virginia.
The company also provides electric delivery services to approximately 1.4 million customers in Pennsylvania, and it operates an electricity distribution network for the Midlands, South West and Wales in the United Kingdom.
PPL also offers a range of customer-care and back-office services to competitive retail energy suppliers, including customer enrollments; contract management; electronic data exchange; simple and complex billing; and call center operations comprising telemarketing, payment processing and collections of overdue accounts.
PPL stock investors receive a 5.68% dividend. Royal Bank of Canada has set its price target at $48. The consensus target is $31.14, and the stock closed on Tuesday at $22.23.
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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 $18 billion and a diversified portfolio of operationally critical commercial real estate that includes 1,215 net lease properties covering approximately 142 million square feet, as of September 30, 2020.
For nearly five 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.
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 5.48% distribution. The Wells Fargo price target is $90. The consensus target is $85, and WP Carey stock closed most recently at $76.63.
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Any or all of these companies could at some point cut their dividends, but with that in mind, investors have a chance to buy all five at discount pricing with huge dividends payouts. Even if a post-correction recovery in the share prices takes a while, the high dividends will make the wait more than tolerable.
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