Nobody was really surprised when the August consumer price index showed yet another month of rising prices. While the headline number has decreased since June (mostly due to lower gasoline prices), consumers are still getting stung by inflation. With top Wall Street firms raising their September federal funds increase forecasts to 75 basis points last week, and the year-end terminal rate to 4.00% to 4.25%, it is a safe bet that it will be rough for stock investors in the near term.
[in-text-ad]
Mortgage applications have dropped to their lowest levels in 22 years, as interest rates are the highest to buy a home since 2008. That is a sure sign that clouds are forming. So, what should investors do now? Seek out companies that can continue to do business as usual, those that will not be stung by inflation and will pay big dividends, and that have stocks rated Buy by top Wall Street firms. We found seven that make good sense now.

However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Chesapeake Energy

This is a very safe energy stock for worried investors who feel the market may have a serious downdraft. Chesapeake Energy Corp. (NYSE: CHK) an independent exploration and production company focused on oil, natural gas and natural gas liquids (NGLs) from underground reservoirs in the United States.

The company holds interests in natural gas resource plays in the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana, as well as the liquids-rich resource play in the Eagle Ford Shale in South Texas.

As of December 31, 2021, it owned interests in approximately 8,200 gross productive wells, including 6,500 wells with working interest and 1,700 wells with an overriding or royalty interest, and it had estimated proved reserves of 661 million barrels of oil equivalents.

Shareholders receive a 6.88% dividend. Wells Fargo has a $130 price target on Chesapeake Energy stock. The consensus target is even higher at $143.17, and shares ended Monday’s trading session at $103.83.

Foot Locker

Shares of this athletic shoe retailer have rallied from lows and look ready to move higher. Foot Locker Inc. (NYSE: FL) engages in the retail of athletic footwear, apparel, accessories, equipment and team licensed merchandise under the Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and other brand names.

As of January 29, 2022, it operated 2,858 retail stores in 28 countries, including the United States, Canada, Australia and New Zealand, as well as 142 franchised Foot Locker stores located in the Middle East and Asia. The company also offers its products through various e-commerce sites and mobile apps.

Shareholders receive a 4.35% dividend. The Jefferies price objective of $61 is well above the $38.33 consensus target. Foot Locker stock closed over 3% higher on Monday at $39.54.

Gilead Sciences

This stock is trading at 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 Sciences 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-text-ad]
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.

Gilead Sciences stock comes with a 4.50% dividend. Oppenheimer’s $90 price objective is the highest on Wall Street. The consensus target is $69.74, and Monday’s closing print of $68.01 was up over 4% on the day.

LyondellBasell Industries

This top chemical company with a sterling balance sheet is another solid play for conservative investors. LyondellBasell Industries N.V. (NYSE: LYB) manufactures chemicals and polymers, refines crude oil, produces gasoline blending components and develops and licenses technologies for production of polymers.

Over half of earnings are generated in the company’s Olefins and Polyolefins Americas segment, where costs are linked to the price of cheap natural gas in the United States, while selling prices are correlated with the price of oil. The company has pursued a strategy of low-cost, high return on invested capital debottlenecks coupled with cash returns to shareholders.

Note that debottlenecking is the process of identifying specific areas or equipment in oil and gas facilities that limit the flow of product (known as bottlenecks) and optimizing them so that overall capacity in the plant can be increased.

Investors receive a 5.66% dividend. The analysts at Barclays have set a $102 price target. That compares to the $99.95 consensus target for LyondellBasell Industries stock, which closed on Monday at $85.31.

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.
Though Newell Brands posted mixed second-quarter results (earnings did top estimates) and lowered its fiscal 2022 outlook, the company’s solid assortment of always-needed products makes it an ideal pick if the going gets rough again.

The dividend yield is 5.07%. Newell Brands stock has a $21 price target at UBS, but the consensus target is higher at $23.10 The shares were last seen on Monday trading at $18.18.
[in-text-ad]

Philip Morris International

This company has continued to grow global market share and its stock makes good sense for total return investors now. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the international cigarette/heated tobacco market. Key combustible brands include Parliament, L&M and Marlboro, one of the most valuable brands in the world.

The company is commercializing IQOS, a heat-not-burn product, in over 40 markets, which could drive earnings in the years to come. Most on Wall Street believe the company offers superior underlying growth prospects, both near term and long term. The share price has been weak of late as investors have questioned the growth potential of its reduced-risk products, and the overall market weakness has contributed. All of its sales are outside of the United States.

Philip Morris International stock investors receive a 5.24% dividend. The $109 BofA Securities price objective is in line with the $109.57 consensus target. Monday’s close was at $97.66 a share.

U.S. Bancorp

This top super-regional bank is among the higher-paying dividend bank stocks. 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.

Shareholders receive a 4.01% dividend. The Wells Fargo price objective is $60, and the consensus target is $54.66. U.S. Bancorp stock closed at $47.56 on Monday.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

The reality is that we are in one of the worst economic periods in America in decades. 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) and now is forced to raise interest rates at a level not seen in years. With that in mind, buying stocks that will pay dependable dividends until this mess is sorted out makes total sense now.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.