Finding stocks that are trading down after the worst first half for the S&P 500 in over 50 years is not hard these days. Finding the companies that also pay big dividends and are likely to keep them is a far different story. Often companies end up in a situation where a one-off event occurs, or a change in the economy can damage the products or services a company provides, and that puts a big-time hurt on the stock price. That is the time for nimble investors to buy shares.
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One big advantage to buying beaten-down stocks with substantial dividends is that one is paid to wait for the recovery. While that can take a while, dividends will arrive four times a year. In addition, selling covered call options also can enhance the income profile.

We screened our 24/7 Wall St. research database looking for well-known stocks that have been hammered but look like solid ideas for investors, and we found six that look ripe for the picking. They all are rated Buy on Wall Street, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Altria

This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In 2008, it spun off its international cigarette business to shareholders. The stock was pounded recently, as last month the U.S. Food and Drug Administration announced the ban of all sales of Juul vape pens. This decision was made after pleas from government officials and public health institutes that say Juul is focused on selling its nicotine products to teenagers. A court has granted Juul’s request for a stay on the ban, allowing the company to still sell the products while an appeal is made on the decision.

While this gets sorted out, it is a good bet that Altria stock investors still will receive a giant 8.71% dividend. Deutsche Bank has a $46 target price on the shares, and the consensus target is even higher at $52.33. The shares closed on Tuesday at $41.72 apiece.

AT&T

The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.
AT&T’s Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.
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AT&T also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.

The company markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.

Investors receive a 5.32% dividend. The Goldman Sachs price objective for AT&T stock is $23. The consensus target is $23.23, and the stock was last seen on Tuesday trading at $21.17.

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 5.27% dividend. Guggenheim analysts have set a price target of $100, while the consensus target is $89.24. Best Buy stock closed almost 5% higher on Tuesday at $69.98.

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.
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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.

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 get to take a 4.69% dividend to the bank every quarter. The $90 Oppenheimer target price is the highest on Wall Street. The consensus target for Gilead Sciences stock is $69.21, and Tuesday’s closing print was $62.34.

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.
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Shareholders receive a 4.72% dividend. The Newell Brands price target at Raymond James is $28 price target, and the consensus target is $27.55. The shares closed at $20.00 on Tuesday.

U.S. Bancorp

This top super-regional bank is among the higher-paying dividend bank stocks and is a Warren Buffett holding. U.S. Bancorp (NYSE: USB) provides various financial services in the United States through a network of 2,434 banking offices, principally operating in the Midwest and western regions of the United States, as well as through online services and a network of 4,232 ATMs.

The company offers depository services, including checking accounts, savings accounts and time certificate contracts; lending services, such as traditional credit products; and credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance and other products. It also provides ancillary services comprising capital markets, treasury management and receivable lock-box collection services to corporate customers; and a range of asset management and fiduciary services for individuals, estates, foundations, business corporations and charitable organizations.

In addition, U.S. Bancorp offers investment and insurance products to its customers principally within its markets, as well as fund administration services to a range of mutual and other funds. The company also provides corporate and purchasing card and corporate trust services, and merchant processing services, as well as cash and investment management, ATM processing, mortgage banking and brokerage and leasing services.

U.S. Bancorp stock comes with a 4.05% dividend. Wells Fargo has a $60 price objective. The consensus target is $57.70. The shares closed on Tuesday at $46.46.

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The stock market is headed lower, and buying any of these in front of second-quarter earnings reports could be dangerous. It may make sense to buy partial positions now and see how the results come in. The bottom line is that none of these companies is going away, so it is a solid idea to buy shares, collect the dividends and wait for a move higher, even if it takes a year.

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