It is hard to believe, but the first quarter will end in a week and many investors will be reviewing their portfolios and making changes for the second quarter and the rest of 2022. One thing is looking more and more likely. At some point, if the highest inflation in 40 years does not start to taper, the Federal Reserve will get more aggressive on rate hikes. In fact, Goldman Sachs said this week that it thinks the hikes scheduled for May and June will both be by 50 basis points instead of 25 basis points.
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It makes sense now to move from momentum stocks and those vulnerable to inflation and rising interest rates to sectors and companies that should continue to be the bellwether plays for the rest of 2022. We screened Jefferies Franchise List of top stock picks and found five such plays, and all five come with dependable dividends.

While these stocks are rated Buy at Jefferies, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

CVS Health

This top stock has remained strong despite this year’s market weakness. CVS Health Corp. (NYSE: CVS) is one of the largest health care companies in the United States, providing retail, mail and specialty pharmacy dispensing services and pharmacy benefits. CVS has become one of the most vertically integrated publicly traded health care companies.

CVS serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, plans offered on public health insurance and private health insurance exchanges, other sponsors of health benefit plans and individuals. This segment operates retail specialty pharmacy stores and specialty mail order, mail order dispensing, and compounding pharmacies, as well as branches for infusion and enteral nutrition services.

CVS completed a $69 billion purchase of health care provider Aetna in November of 2018 and remains one of the top picks for 2022 and beyond, as CVS has become one of the most vertically integrated publicly traded health care companies, and health care has lagged the S&P 500 significantly this year.

CVS Health stock investors receive a 2.20% dividend. The Jefferies price target on the shares is $120. The consensus target is $117.24, and the closing share price on Wednesday was $106.20.

Huntsman

This top stock to buy offers intriguing potential for value expansion. The Huntsman Corp. (NYSE: HUN) portfolio of businesses represents a diversified set of chemical products touching an even broader set of end markets.

The company has four business segments (Polyurethanes, Advanced Materials, Performance Products and Textile Effects) representing the revenues and profits from the company’s exposure to five primary chemical chains. Across many of these platforms, Huntsman operates a vertically integrated footprint from upstream commodities to downstream derivatives.
Huntsman has one of the strongest balance sheets in the sector, combined with progress reducing cyclical risk and ample opportunity to grow faster than gross domestic product (which will be slowing dramatically in the first quarter) due to innovation across all silos.

Shareholders receive a 2.21% dividend. Jefferies has a $49 price target on Huntsman stock, and the consensus target is $46.28. The shares closed on Wednesday at $39.82.
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Newell Brands

This top consumer goods stock is a safe play for investors worried about a toppy market, and it has backed up recently. Newell Brands Inc. (NASDAQ: NWL) is a manufacturer and marketer of consumer products with six reporting segments: Writing (Sharpie, Paper Mate, Waterman, Parker), Home Solutions (Rubbermaid, Calphalon, Goody), Tools (Irwin, Lenox), Commercial Products (Rubbermaid Commercial Products, Rubbermaid Healthcare), Baby & Parenting (Graco, Aprica) and Jarden (Yankee Candle, Jostens, Oster, Sunbeam, Mr. Coffee, K2, Marmot, Rawlings, Coleman, First Alert and many more).

Consumer staples stocks like Newell tend to be solid ideas in times of inflation and rising rates. In 2021, the company’s cash distributions to shareholders were close to $400 million. During the period, Newell produced roughly $600 million, which included an abnormally large $350 million in cash spent on an inventory buildup, which the company attributed to preparation for sales growth. With a dividend payout ratio below 70%, Newell should continue to easily support the large and tempting dividend.

Shareholders receive a 4.19% dividend. The $28 Jefferies price target is edged out by the $28.91 consensus target. Newell Brands stock closed on Wednesday at $21.99 a share.

TJX Companies

When inflation strikes, nobody is better positioned in the retail space than this top company, and the shares have been hammered this year. TJX Companies Inc. (NYSE: TJX) operates as an off-price apparel and home fashions retailer.

The company sells family apparel, including footwear and accessories, and home fashions, such as home basics, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tabletop and cookware, as well as expanded pet, kids and gourmet food departments. It also offers fine jewelry and accessories, as well as other merchandise.

As of March 30, 2021, it operated 1,271 T.J. Maxx, 1,131 Marshalls, 821 HomeGoods, 48 Sierra and 34 Homesense stores (as well as websites) in the United States. It also operated 280 Winners, 143 HomeSense and 102 Marshalls stores in Canada; 602 T.K. Maxx and 78 Homesense stores in Europe; and 62 T.K. Maxx stores in Australia.

Shareholders receive a 1.69% dividend. Jefferies has set its price target at $90. The consensus target for TJX Companies stock is $80.04. The shares closed Wednesday at $59.48, so hitting the Jefferies target would be a 50% gain for investors.

This is an off-the-radar idea in financial services that could be a big winner in a rising interest rate environment. Webster Financial Corp. (NYSE: WBS) operates as the bank holding company for Webster Bank National Association, which provides a range of banking, investment and financial services to individuals, families and businesses in the United States.
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The Commercial Banking segment provides lending, deposit and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators and consumers; and trust, asset management, financial planning, insurance, retirement and investment products.

The Retail Banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers. The company also offers online and mobile banking services. As of December 31, 2021, it operated 130 banking centers and 251 ATMs.

Its HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants and financial advisors.

Investors receive a 2.78% dividend. The Webster Financial stock price target at Jefferies is $73. The slightly lower $72.10 consensus target also compares to Wednesday’s close at $57.18.

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These five top picks at Jefferies, while perhaps not the most exciting companies on Wall Street, offer dependable dividends and have safe and reliable business models that work well in times of economic stress. These stocks make sense for growth and income investors looking to shift to a safer profile for the rest of what could be a very turbulent year.

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