We got what we expected Friday, as the consumer price index came in again at levels not seen in over 40 years. One thing is almost a certainty now: things could get much worse before they get better. Next week, the Federal Reserve will meet and another 50-basis-point increase will be announced. While rates are still low on a historical basis, the reality is that rising rates, combined with soaring inflation, are slowing the economy big time.
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Mortgage applications dropped to their lowest levels in 22 years this week. That is a sure sign clouds are forming. So what should investors do now? Seek out companies that can continue to do business as usual, that likely will not get stung by inflation,  pay big dividends and are stocks rated Buy by top Wall Street firms. We found seven that make good sense now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

British American Tobacco

This conglomerate got much bigger with the acquisition of Reynolds American in 2017. British American Tobacco PLC (NYSE: BTI) provides tobacco and nicotine products to consumers worldwide. It offers vapor products, tobacco heating products and modern oral products; combustible products; and traditional oral products, such as Swedish-style snus and American moist snuff. The company distributes its products to retail outlets.

The company’s New Categories business, which includes products outside of traditional cigarettes, saw revenues increase 50% to £942 million in the first half of 2021. The company has noted recently that non-combustible products, such as its Vuse vaping brand and Glo heated tobacco brand, now make up almost 12% of total operations.

British American Tobacco stock investors receive a 6.72% dividend. The Jefferies price target is $49.10, and the consensus target is higher at $52.50. The stock closed on Thursday at $43.06.

Devon Energy

This may be one of the best value propositions in the sector, as it uses a variable dividend strategy. Devon Energy Corp. (NYSE: DVN) is an independent energy company that primarily engages in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs) in the United States and Canada. It operates approximately 19,000 wells.

The company also offers midstream energy services, including gathering, transmission, processing, fractionation and marketing to producers of natural gas, NGLs, crude oil and condensate through its natural gas pipelines, plants and treatment facilities.

Production is weighted toward crude oil while growth opportunities are liquids focused, anchored by the Delaware Basin, SCOOP/STACK, Eagle Ford Shale, Canadian Oil Sands, and the Barnett. Devon also owns equity in the publicly traded midstream MLP EnLink.

Shareholders receive a 6.52% dividend. Truist Financial has a $100 target price on Devon Energy stock. The consensus target is $78.71, and shares closed at $77.85 on Thursday.

Gilead Sciences

This beaten-down biotech is trading a very reasonable 9.05 times estimated 2022 earnings and has big-time upside potential. Gilead Sciences Inc. (NASDAQ: GILD) is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in the areas of unmet medical need in the United States, Europe and elsewhere.
Gilead provides Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/Eviplera, Stribild and Atripla products for the treatment of human immunodeficiency virus (HIV) infection; Veklury, an injection for intravenous use, for the treatment of coronavirus disease 2019; and Epclusa, Harvoni, Vosevi, Vemlidy and Viread for the treatment of liver diseases. It also offers Yescarta, Tecartus, Trodelvy and Zydelig products for the treatment of hematology, oncology and cell therapy patients.
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In addition, Gilead provides Letairis, an oral formulation for the treatment of pulmonary arterial hypertension; Ranexa, an oral formulation for the treatment of chronic angina; and AmBisome, a liposomal formulation for the treatment of serious invasive fungal infections.

The company has collaboration agreements with Arcus Biosciences, Pionyr, Tizona, Tango Therapeutics, Jounce Therapeutics, Galapagos, Janssen, Japan Tobacco, Gadeta, Bristol-Myers Squibb, Merck and Novo Nordisk.

Investors are happy with a 4.68% dividend. The $90 Oppenheimer price objective is the highest on Wall Street. The consensus target of $73.10 is also well above Thursday’s $61.18 closing print for Gilead Sciences stock.

Leggett & Platt

While also somewhat off the radar, this stock has almost been cut in half over the past year and offers massive upside potential. Leggett & Platt Inc. (NYSE: LEG) designs, manufactures and markets engineered components and products worldwide.

The company offers steel rods, drawn wires, foam chemicals and additives, innersprings, specialty foams, private label finished mattresses, mattress foundations, wire forms for mattress foundations, adjustable beds, industrial sewing and quilting machines, and mattress packaging and glue drying equipment, as well as machines to produce innersprings for industrial users of steel rods and wires, manufacturers of finished bedding, big box and e-commerce retailers, bedding brands and mattress retailers, department stores and home improvement centers.

Leggett & Platt also provides mechanical and pneumatic lumbar support and massage systems for automotive seating; seat suspension systems, motors and actuators and cables; titanium, nickel and stainless-steel tubing, formed tubes, tube assemblies and flexible joint components for fluid conveyance systems; and engineered hydraulic cylinders to automobile original equipment manufacturers (OEMs) and Tier 1 suppliers, aerospace OEMs and suppliers, and mobile equipment OEMs.

Investors receive a 4.53% dividend. Goldman Sachs has set a $50 target price, and the consensus target for Leggett & Platt stock is $46.50. The shares closed at $38.60 on Thursday.

Medical Properties Trust

This stock may offer investors one of the best values at current price levels. Medical Properties Trust Inc. (NYSE: MPW) acquires, develops and invests in health care facilities and leases health care facilities to health care operating companies and providers. The company also provides mortgage loans to health care operators, as well as working capital and other term loans to its tenants/borrowers.

With a growing portfolio and a versatile business model, the company continues to rank high across Wall Street. The analysts noted that the company’s acute care hospitals rent coverage increased nicely and the company attributed the increase to better cost controls and higher patient admissions.

Medical Properties Trust stock comes with a 6.87% distribution. The price target at RBC Capital Markets is $22, but the consensus target is higher at $24.07. Shares closed trading on Thursday at $16.13.

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).
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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 4.47% dividend. Newell Brands stock has a $38 price target at Jefferies. The consensus target is $27.82, and shares were last seen on Thursday at $19.98.

Simon Property

Shares of this leading company have been pounded and are offering the best entry point since last year. Simon Property Group Inc. (NYSE: SPG) is a very strong company for investors looking to play the industry. It invests in real estate markets across the globe. It engages in investment, ownership, management and development of properties. The company primarily invests in regional malls, premium outlets, mills and community/lifestyle centers to create its portfolio.

Through its subsidiary partnership, Simon Property owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European real estate investment trust with over 260 shopping centers in 13 countries.

Shareholders receive a 6.38% distribution. Stifel has a price target of $165. The consensus target is $163.82. Simon Property stock had a $103.87 closing share price on Thursday.

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These are seven top companies that, while somewhat off the radar for some, offer investors outstanding entry points, some of the biggest dividends, are Buy rated at top Wall Street firms, and have a reasonably strong moat around their businesses.

The reality is that we are in one of the worst periods in America in decades. Horrific and profligate government spending, combined with a Federal Reserve that never saw the wave of inflation coming until it was too late, and even admitted it. With that in mind, buying stocks that will pay dependable dividends until this mess is sorted out makes total sense now for investors with a long-term profile.

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