The stock market is off to the worst start in almost 100 years, and things likely will get worse before they get better. Last week’s horrible inflation reports highlighted just how much the increase in prices (the highest in 40 years) are hammering away at consumers’ purchasing power. Friday’s retail sales numbers were encouraging, but the reality is that the major banks are stashing away cash, expecting a wave of bad loans, and credit card usage is soaring.

It would be nice to go back 20 years to 5% guaranteed certificates of deposit (CDs), but that is a long way off. Investment-grade bonds have been hammered this year, so they are not an alternative. Often when income investors look for defensive companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason.
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The 66 companies that made the cut for the 2022 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further, with the following attributes also mandatory for membership on the aristocrat list:

• Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
• They must have an average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
• They must be a member of the S&P 500.

With the potential for massive downside still looming, and interest rates definitely going higher, we thought it would be a good idea to look for companies on the Dividend Aristocrats that pay among the biggest dividends that investors can buy now and hold forever.

Seven top companies hit our screen. While they are rated Buy at top Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AbbVie

This is a top pharmaceutical stock pick across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.

One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of 2020.
AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.

Shareholders receive a 3.75% dividend. Wells Fargo has a Wall Street high target price of $200 for AbbVie stock. The consensus target is $163.19, and the shares closed trading Friday at $153.62.
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Cardinal Health

This is a solid way for growth and income investors who are more conservative to play the health care sector. Cardinal Health Inc. (NYSE: CAH) is one of the largest drug and medical product distributors. The company generates approximately two-thirds of its profit from the pharmaceutical business and nearly one-third from its medical business.

The pharmaceutical distribution business supports retail/mail/hospital/physician clients, as well as drug manufacturers. The medical business manufactures its own portfolio of medical products and distributes brand-name products to hospitals and physicians.

Shareholders receive a 3.67% dividend. Morgan Stanley recently lowered its $74 price objective to $70. That is still well above the $59.62 consensus target for Cardinal Health stock, as well as Friday’s close at $55.21.

Consolidated Edison

This old-school utility stock offers income investors the stability and track record many seek now. Consolidated Edison Inc. (NYSE: ED) offers electric services to approximately 3.5 million customers in New York City and Westchester County; gas to around 1.1 million customers in Manhattan, the Bronx and parts of Queens and Westchester County; and steam to about 1,700 customers in parts of Manhattan.

Consolidated Edison owns 62 area distribution substations and various distribution facilities; 39 transmission substations and 62 area stations; electric generation facilities with an aggregate capacity of 724 megawatts that run on gas and fuel oil; 4,348 miles of mains and 369,791 service lines for natural gas distribution; and one steam-electric generating station and five steam-only generating stations.

The company operates 572 circuit miles of transmission lines; 14 transmission substations; 86,794 in-service line transformers; 3,994 pole miles of overhead distribution lines; and 1,889 miles of underground distribution lines, as well as 1,867 miles of mains and 105,482 service lines for natural gas distribution. In addition, it is involved in the sale and related hedging of electricity to retail customers, and the provision of energy-related products and services to wholesale and retail customers.

Consolidated Edison stock comes with a 3.38% dividend. Mizuho price target is $99, and the consensus target is $88.33. The shares closed on Friday at $93.40.

The recent back-up in oil pricing has this integrated giant trading at levels printed earlier this year and offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
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Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.

Investors receive a 4.16% dividend, which will continue to be defended. The $120 BofA Securities price target compares with a $102.90 consensus target. Exxon Mobil stock closed on Friday at $84.54.

IBM

This blue-chip giant still offers investors a very solid entry point. International Business Machines Corp. (NYSE: IBM) provides integrated solutions and services worldwide through these four business segments.

The Software segment offers hybrid cloud platform and software solutions, such as Red Hat, an enterprise open-source solutions; software for business automation, AIOps and management, integration, and application servers; data and artificial intelligence solutions; and security software and services for threat, data and identity. This segment also provides transaction processing software that supports clients’ mission-critical and on-premise workloads in banking, airlines and retail industries.

The Consulting segment offers business transformation services, including strategy, business process design and operations, data and analytics, and system integration services; technology consulting services; and application and cloud platform services.

The Infrastructure segment provides on-premises and cloud-based server and storage solutions for its clients’ mission-critical and regulated workloads; and support services and solutions for hybrid cloud infrastructure, as well as remanufacturing and remarketing services for used equipment.

The Financing segment offers lease, installment payment, loan financing and short-term working capital financing services.

IBM stock investors receive a 4.72% dividend. Credit Suisse’s $166 price target is well above the $144.32 consensus target and Friday’s closing print of $139.92.

This is an ideal stock for growth and income investors looking for a safer, inflation-busting idea for 2022. Realty Income Corp. (NYSE: O) is an S&P 500 company structured as a real estate investment trust. It is dedicated to providing stockholders with dependable monthly income.
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The company’s distributions 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 608 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 109 times since its public listing in 1994.

Investors receive a 4.22% distribution. The Realty Income stock price target at Raymond James is $81. The consensus target is $75.19 consensus, and shares closed at $70.31 on Friday.

VFC

This is the proverbial “off-the-radar” idea that can be purchased and held forever as it makes name-brand popular clothing. V.F. Corp. (NYSE: VFC) engages in the design, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products for men, women and children in the Americas, Europe and elsewhere.

The company offers outdoor, merino wool and other natural fibers-based, lifestyle and casual apparel; footwear; equipment; accessories; outdoor-inspired, performance-based, youth culture/action sports-inspired, streetwear and protective work footwear; handbags, luggage, backpacks and totes; and work and work-inspired lifestyle apparel and footwear.

VFC provides its products under the North Face, Timberland, Smartwool, Icebreaker, Altra, Vans, Supreme, Kipling, Napapijri, Eastpak, JanSport, Dickies and Timberland PRO brand names. The company sells its products primarily to specialty stores, department stores, national chains and mass merchants, as well as through direct-to-consumer operations, including retail stores, concession retail stores and e-commerce sites and other digital platforms

The dividend yield is 4.40%. Credit Suisse has set a $61 target price. The consensus target is $58.05. Friday last V.F. stock trade was reported at $45.45 a share.

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These seven top companies pay some of the highest dividends in the Dividend Aristocrat universe. Their stocks are rated Buy, and they supply products or services unlikely to go out of style or demand. Friday’s rally was a refreshing end to yet another bad week on Wall Street, and it is likely the sellers will return as rates are headed higher and inflation may not have peaked. Plus, with earnings season in full swing, it may make sense to buy partial positions now and wait for results from these companies.

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