Most investors were very sad to say goodbye to 2021, and with good reason. All the major indexes had an incredible year, with the S&P 500 leading the group with a 26.9% gain, followed by the Nasdaq’s 21.4% increase and the Dow Jones industrials at 17.7%. The S&P 500 posted an astounding 70 new all-time highs during the year, a record only surpassed by 1995. The bottom line is, if you didn’t make money last year, then you probably want to switch financial advisors.

With the looming storm clouds on the horizon, and the potential for as many as four interest rate increases, many strategists on Wall Street feel we will be fortunate to have high single-digit gains in 2022. We could very well have a 20% or bigger sell-off added to the mix. Goldman Sachs feels like energy and quality utility stocks are among the best ways for investors to go this year. These four stocks all pay big dividends and could very well offer shelter from the storm. Hard assets like real estate should also do well in a rising interest rate environment, and we found a very solid pick on the Conviction List.

While all four of the Conviction List picks are among the top ideas at Goldman Sachs, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

DTE Energy

With the potential for more frigid winter weather, this company may look to extend gains well into 2022. DTE Energy Co. (NYSE: DTE) is the largest utility in Michigan. Its largest operating units are DTE Electric, an electric utility serving 2.2 million customers in southeastern Michigan, and DTE Gas, a natural gas utility serving 1.3 million customers in the state. DTE Energy also has non-utility energy businesses that focus on power and industrial projects, natural gas midstream and energy trading.

The company’s Gas segment purchases, stores, transports, distributes and sells natural gas to residential, commercial and industrial customers throughout Michigan, and it sells storage and transportation capacity. This segment has approximately 19,800 miles of distribution mains, 1,305,000 service pipelines and 1,273,000 active meters, as well as approximately 2,000 miles of transmission pipelines.

Its Gas Storage and Pipelines segment owns natural gas storage fields, lateral and gathering pipeline systems and compression and surface facilities. It also has ownership interests in interstate pipelines serving the Midwest, Ontario and northeast markets.

The company’s Power and Industrial Projects segment offers metallurgical coke; pulverized coal and petroleum coke to the steel, pulp and paper, and other industries; and power, steam and chilled water production, and wastewater treatment services, as well as supplies compressed air to industrial customers.

Shareholders receive a 2.97% dividend. The Goldman Sachs price objective on DTE Energy stock is $138, well above the $129.00 consensus target price and Thursday’s closing share price of $119.83.

NRG

This stock has made a nice run off the lows and is another solid idea for investors who are more conservative. NRG Energy Inc. (NYSE: NRG) operates as an integrated power company in the United States that produces, sells and delivers electricity and related products and services to 3.6 million residential, industrial and commercial consumers.
NRG generates electricity using natural gas, coal, oil, solar, nuclear and battery storage. It also provides system power, distributed generation, renewable products, backup generation, storage and distributed solar, demand response, energy efficiency, advisory and on-site energy solutions, as well as carbon management and specialty services.

In addition, NRG trades in electric power, natural gas and related commodities; environmental products; weather products; and financial products, including forwards, futures, options and swaps. Further, the company procures fuels; provides transportation services; and directly sells energy, services and products and services to retail customers under the NRG, Reliant, Green Mountain Energy, Stream, XOOM Energy and other brand names.

NRG Energy stock investors receive a 3.15% dividend. Goldman Sachs has a $53 price target, while the consensus figure is $46.30. The stock closed at $40.90 a share on Thursday.

Phillips 66

This extremely diversified energy company has a long and successful operating history. Phillips 66 (NYSE: PSX) operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties. The company holds many of these assets within its master limited partnership, Phillips 66 Partners.

The company is able to benefit from the tax-advantaged structure while still operating a more diversified operating business that also contains many assets that are not ideal master limited partnership assets, such as its fast-growing chemical manufacturing business and its super-profitable refined products marketing business.

Investors receive a 4.27% dividend. The $93 Goldman Sachs price target compares to the $95.57 consensus target. Phillips 66 stock closed on Thursday at $86.78.

Realty Income

This is an ideal stock for growth and income investors looking for a safer, inflation-busting idea for this year. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income. It is structured as a real estate investment trust (REIT), 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, garnering it a spot on the S&P 500 Dividend Aristocrats index.

Investors receive a 4.12% distribution. Goldman Sachs has set a huge $92 price objective. The $79.29 consensus target for Realty Income stock is still 10% or so higher than the $71.70 close on Thursday.

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These four top stocks still have room to run and offer investors looking for income some dependable quarterly payments. They all make sense now, and those versed in writing covered calls could increase the income and total return potential using that strategy with these stocks.

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