While Friday’s rally was a very pleasant surprise, the reality is we could be in for some very tough sledding this summer and into the fall. Federal Reserve Chair Powell has telegraphed a string of 50-basis-point increases for the rest of this year and into 2023, with a stated goal of getting the federal funds rate to the 3.25% to 3.50% level. With the current rate at 0.75% to 1.00%, that is a long road to travel.

With the highest inflation in 40 years, and a host of additional issues both at home and abroad, now is a very good time to move to top value stocks that pay dividends. Value stocks are typically defined as shares of a company with solid fundamentals that are priced below those of its peers, based on analysis of price-to-earnings ratio, yield and other factors. The BofA Securities Value 10 portfolio is quantitatively generated and is based on the firm’s proprietary BofA Securities versus consensus earnings surprise model plus three additional screening criteria. The universe the analysts use is the S&P 500.

We screened the Value 10 portfolio for the five stocks with the highest dividends. We found five top picks that could be big 2022 winners. While all are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Best Buy

The need for the electronics and gear to set up a “work from home” office has been a huge tailwind for this leading retailer, and what started as a pandemic necessity has turned into a trend. Best Buy Inc. (NYSE: BBY) is a top specialty retailer of consumer electronics in the United States and Canada. As of January 30, 2022, it had 1,144 stores.

Those stores provide computing products, such as desktops, notebooks and peripherals; mobile phones comprising related mobile network carrier commissions; networking products; tablets covering e-readers; smartwatches; and consumer electronics consisting of digital imaging, health and fitness, home theater, portable audio comprising headphones and portable speakers, and smart home products.

Its stores also offer appliances, such as dishwashers, laundry, ovens, refrigerators, blenders, coffee makers and vacuums; entertainment products consisting of drones, peripherals, movies, music and toys, as well as gaming hardware and software, and virtual reality and other software products; and other products, such as baby, food and beverage, luggage, outdoor living and sporting goods.

In addition, Best Buy provides consultation, delivery, design, health-related, installation, memberships, repair, set-up, technical support and warranty-related services. The company offers its products through stores and websites under the Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Best Buy Mobile, Pacific Kitchen, Home, and Yardbird banners.

Shareholders receive a 4.12% dividend. The BofA Securities price target for Best Buy stock is $135, while the consensus target is $123.71. The shares closed trading on Friday at $86.36.

This integrated giant is a safer way for investors looking to get positioned in the energy sector, as it has a solid position when it comes to natural gas. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.

The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.

The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.

Chevron stock comes with a 3.38% dividend. BofA Securities has a $205 target price. The $175.41 consensus target is much closer to Friday’s close at $171.83 a share.

Hartford Financial Service

This insurance giant is a dependable idea for conservative investors, and it offers incredible value at current trading levels. Hartford Financial Services Group Inc. (NYSE: HIG) provides insurance and financial services to individual and business customers in the United States, the United Kingdom and elsewhere.

Its Commercial Lines segment offers workers’ compensation, property, automobile, liability, umbrella, bond, marine, livestock and reinsurance, as well as customized insurance products and risk management services, including professional liability, bond, surety and specialty casualty coverages through regional offices, branches, sales and policyholder service centers, independent retail agents and brokers, wholesale agents and reinsurance brokers.

The Personal Lines segment provides automobile, homeowners and personal umbrella coverage through direct-to-consumer channels and independent agents, while its Property & Casualty Other Operations segment offers coverage for asbestos and environmental exposures.

The Group Benefits segment provides group life, disability and other group coverages to members of employer groups, associations and affinity groups through direct insurance policies; reinsurance to other insurance companies; employer paid and voluntary product coverages; disability underwriting, administration and claims processing to self-funded employer plans; and a single-company leave management solution. This segment distributes its group insurance products and services through brokers, consultants, third-party administrators, trade associations and private exchanges.

The Hartford Funds segment offers investment products for retail and retirement accounts; exchange-traded products through broker-dealer organizations, independent financial advisers, defined contribution plans, financial consultants, bank trust groups and registered investment advisers; and investment management and administrative services, such as product design, implementation and oversight.

Shareholders receive a 2.21% dividend. The $101 BofA Securities target price is well above the $84.56 consensus target. Hartford Financial Service stock closed at $69.55 on Friday.

This is a great regional idea for investors looking to add financials to portfolios. M&T Bank Corp. (NYSE: MTB) operates as the holding company for Manufacturers and Traders Trust Company and for Wilmington Trust, National Association.

The Business Banking segment offers deposits, business loans and leases and credit cards, as well as cash management, payroll and letters of credit services to small businesses and professionals. The Commercial Banking segment provides credit and banking services for middle-market and large commercial customers. The Retail Banking segment offers demand, savings and time accounts; consumer installment loans, automobile and recreational finance loans, home equity loans and lines of credit and credit cards; mutual funds and annuities; and other services.

The Commercial Real Estate segment offers multifamily residential and commercial real estate credit and deposit services. Its Discretionary Portfolio segment provides deposits; securities, residential real estate loans and other assets; and short and long term borrowed funds, as well as foreign exchange services. The company’s Residential Mortgage Banking segment offers residential real estate loans for consumers and sells those loans in the secondary market, and it purchases servicing rights to loans originated by other entities.

M&T Bank also provides trust and wealth management, fiduciary and custodial, investment management and insurance agency services.

Investors receive a 2.88% dividend. BofA Securities has set a $210 price target, and the consensus target for M&T Bank stock is $206.35. Friday’s last trade was at $166.58 a share.

Seagate

This disk drive giant is hitting on all cylinders and looks reasonable at current trading levels. Seagate Technology Holdings PLC (NASDAQ: STX) provides data storage technology and solutions in Singapore, the United States, the Netherlands and elsewhere.

The company offers hard disk and solid state drives, including serial advanced technology attachment, serial attached SCSI and non-volatile memory express products; solid state hybrid drives; and storage subsystems. Its products are used in enterprise servers and storage systems and edge compute and non-compute applications.

Seagate also provides an enterprise data solutions portfolio, comprising storage subsystems and mass capacity optimized private cloud storage solutions for enterprises, cloud service providers and scale-out storage servers and original equipment manufacturers. In addition, it offers external storage solutions under the Seagate Backup Plus and Expansion product lines, as well as under the LaCie and Maxtor brands in capacities up to 16 terabytes.

Shareholders enjoy a 3.47% dividend. The Seagate Technology stock target price at BofA Securities is $125. The consensus target is near $100, and the last trade on Friday hit the tape at $80.71.

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Five quality blue chip companies that look poised to stand tall if the market sell-off continues, and all pay dependable dividends. All these companies are leaders in their respective sectors and offer worried investors a good place to move capital to now from higher beta names.

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