Last week, the S&P 500 sold off for five days in a row. That’s the first time that has happened since back in February. In addition, as we have warned recently, it now has been almost a full year since we have had a 5% sell-off. After watching the market action last week, we could be in for some tough sledding over the balance of September and into October, which is typically one of the weakest times of the trading year.
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In times of distress, it often is good to look at Treasury debt and investment-grade corporate bonds, but not now. With interest rates still close to generational lows, and the prospect of inflation pushing rates higher the rest of the year and in 2022, it makes much more sense to buy ultra-conservative stocks that pay sizable and, most importantly, dependable dividends.

We screened our 24/7 Wall St. research universe looking for safe ideas for income-hungry investors and found five that look like outstanding ideas now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

American Electric Power

This industry-leading utility is also a solid dividend-paying company. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.4 million customers in 11 states.

The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

Many on Wall Street feel that the stock trades at a discount to its utility peers, and they feel it deserves a premium. Top analysts also think the company may sell generating assets and buy back shares with the proceeds, which also will be accretive.

American Electric Power stock investors receive a 3.33% dividend. Morgan Stanley has an Overweight rating on the shares and a $110 price target. The Wall Street consensus price target is lower at $97.59, and shares closed on Friday at $88.83 apiece.

This stock offers investors growth and income potential. Dow Inc. (NYSE: DOW) is a leading materials science company and was formed from the merger of Dow and DuPont in 2017 and the subsequent spin-off 2019. The company is organized into three principal divisions: Performance Materials & Coatings (23% of EBITDA), Industrial Intermediates & Infrastructure (27%) and Packaging & Specialty Plastics (51%).
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Dow’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. Consumer Solutions consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses.

The Infrastructure Solutions segment consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses. Performance Materials & Chemicals consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses. The Performance Plastics unit consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

Investors receive a 4.63 % dividend. The Jefferies Buy rating on Dow stock comes with a $75, price objective. The consensus target is just $67.38, and Friday’s closing share price was $60.41.

Exxon Mobil

Shares of this mega-cap energy leader have backed up nicely as oil sold off in August, and with people hitting the road for the holiday weekend 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.

The company announced recently that Exxon Mobil Catalysts and licensing has introduced Exxon Mobil Renewable Diesel (EMRD) process technology to help meet the evolving needs for mobility, while utilizing renewable feedstock. This new process technology converts feedstocks including, but not limited to, vegetable oils, unconverted cooking oil and animal fats, into renewable diesel. Due to significant interest in producing renewable jet fuel as a primary product, Exxon is also developing advanced catalyst and process technology solutions that will offer EMRD process licensees flexibility to tailor the amount of jet fuel versus diesel produced.

Investors receive a 6.45% dividend, which will continue to be defended. The $90 BofA Securities price target is well above the $66.25 consensus target for Exxon Mobil stock. The shares closed at $53.98 on Friday.

This remains a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.
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The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.

Shareholders receive a 3.54% dividend. JPMorgan’s Overweight rating comes with a $100 price target. The consensus target is $93.21, and shares ended last week trading at $73.45.

PepsiCo

This top consumer staples pick will be supplying the goods for tailgating and football watch parties around the country. PepsiCo Inc. (NYSE: PEP) operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips and Fritos corn chips.

The Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, natural granola and oat squares, as well as the recently name-changed Aunt Jemima mixes and syrups, and Quaker Chewy granola bars, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes.

PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Tropicana Pure Premium, Sierra Mist and Mug brands, as well as ready-to-drink tea and coffee, and juices.

Shareholders receive a 2.77% dividend. The Morgan Stanley price target on the Overweight-rated shares is $172, while the consensus target is $165.55. PepsiCo stock closed on Friday at $155.46.

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Of course, a big sell-off will take almost all stocks down some. However, these more conservative companies that pay dividends on a dependable basis should fare much better than momentum and meme stocks if a massive algorithmic-led selling spree happens. The trading action late last week seems to indicate that something is brewing, so now may be the right time to take some profits and move to calmer waters.

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