Unless you are an incredible market-timer and stock trader, making money this year has been almost impossible. Oh sure, if you timed the June to August bear market rally just right you could have made money, but unless you grabbed it quickly, you gave it all back in a few weeks. In reality, the consumer price index number that comes out Thursday, while probably off the summer highs, will still be painful. As consumers know well, the prices of many everyday items, especially food, are much higher than the stated inflation numbers.
[in-text-ad]
While historically September is the worst month of the year for stocks on an annual basis, the real scary month this year could be October, and not just because of the potential for a spooky Halloween. With third-quarter earnings reports on deck this week, typical seasonal worries and what likely will be another increase in the federal funds rate of 75 basis points in early November, the best ideas are the safest ideas.

We screened the Goldman Sachs Conviction List of top stock picks looking for dividend-paying blue chips that worried investors can look at now. Eight top companies hit our screens, all of which are of course rated Buy. It is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.

Bank of America

Interest rate increases are welcomed by banks, and this is one of the biggest in the country. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.

Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.

Note that Warren Buffett owns a stunning 1.1 billion shares of the bank.

Shareholders receive a 2.87% dividend. Goldman Sachs has a $40 target price on Bank of America stock. The consensus target is $41.15, and shares closed Tuesday’s trading at $29.77.

Constellation Brands

If any company has products that stay in style, it is this one, and it has only 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.

The company is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.
Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.

Investors receive a 1.45% dividend. The Goldman Sachs price target is $273, and the consensus is  $274.90. Constellation Brands stock ended Tuesday trading at $221.38.
[in-text-ad]

DTE Energy

With the potential for extremely cold winter weather, this company may look to extend gains in the final quarter of 2022 and next year. DTE Energy Co. (NYSE: DTE) is the largest utility in Michigan. Its largest operating units are DTE Electric, an electric utility serving 2.2 million customers in southeastern Michigan, and DTE Gas, a natural gas utility serving 1.3 million customers in the state. DTE Energy also has non-utility energy businesses that focus on power and industrial projects, natural gas midstream and energy trading.

The company’s Gas segment purchases, stores, transports, distributes and sells natural gas to residential, commercial and industrial customers throughout Michigan, and it sells storage and transportation capacity. This segment has approximately 19,800 miles of distribution mains, 1,305,000 service pipelines and 1,273,000 active meters, as well as approximately 2,000 miles of transmission pipelines.

Its Gas Storage and Pipelines segment owns natural gas storage fields, lateral and gathering pipeline systems and compression and surface facilities. It also has ownership interests in interstate pipelines serving the Midwest, Ontario and northeast markets.

The Power and Industrial Projects segment offers metallurgical coke; pulverized coal and petroleum coke to the steel, pulp and paper, and other industries; and power, steam and chilled water production, and wastewater treatment services, as well as supplies compressed air to industrial customers.

DTE Energy stock comes with a 3.33% dividend. The $143 Goldman Sachs price objective is higher than the $140.44 consensus target and Tuesday’s closing price of $106.30 a share.

Merck

This remains a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) operates as a health care company worldwide. It operates through the following two segments.

The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular and diabetes, as well as vaccine products, such as preventive pediatric, adolescent and adult vaccines.

The Animal Health segment discovers, develops, manufactures and markets veterinary pharmaceuticals, vaccines and health management solutions and services, as well as digitally connected identification, traceability and monitoring products.
Merck serves drug wholesalers and retailers, hospitals and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers and other institutions; and physicians and physician distributors, veterinarians and animal producers. The company has collaborations with AstraZeneca, Bayer, Eisai, Ridgeback Biotherapeutics and Gilead Sciences.

The dividend yield here is 3.15%. Goldman Sachs has set a $106 target price. Merck stock has a $100.90 consensus target, and Tuesday’s closing print was $91.05.
[in-text-ad]

NRG Energy

This stock has made a nice run off the lows and is a solid idea for investors who are more conservative. NRG Energy Inc. (NYSE: NRG) operates as an integrated power company in the United States that produces, sells and delivers electricity and related products and services to 3.6 million residential, industrial and commercial consumers.

The company generates electricity using natural gas, coal, oil, solar, nuclear and battery storage. It also provides system power, distributed generation, renewable products, backup generation, storage and distributed solar, demand response, energy efficiency, advisory and on-site energy solutions, as well as carbon management and specialty services.

In addition, NRG trades in electric power, natural gas and related commodities; environmental products; weather products; and financial products, including forwards, futures, options and swaps. Further, the company procures fuels; provides transportation services; and directly sells energy, services and products and services to retail customers under the NRG, Reliant, Green Mountain Energy, Stream, XOOM Energy and other brand names.

Investors are paid a very safe and solid 3.41% dividend. NRG Energy stock has a $46 price objective at Goldman Sachs. The consensus figure is $44.40, and shares closed on Tuesday at $41.06.

PepsiCo

This top consumer staples company will be supplying the goods for football tailgates and parties. PepsiCo Inc. (NYSE: PEP) operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips and Fritos corn chips.

The Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, natural granola and oat squares, as well as the recently name-changed Aunt Jemima mixes and syrups, and Quaker Chewy granola bars, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes.

Its North America Beverages segment offers beverage concentrates, fountain syrups and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Tropicana Pure Premium, Sierra Mist and Mug brands, as well as ready-to-drink tea and coffee, and juices.

Shareholders receive a 2.84% dividend. Goldman Sachs’s $185 price target is higher than the consensus target of $182.08. PepsiCo stock closed on Tuesday at $162.59.

Despite the economy’s ups and downs, somebody has to pick up the trash and recyclables each week, and this is a leader in the business. Republic Services Inc. (NYSE: RSG) offers environmental services in the United States, including collection and processing of recyclable materials; collection, transfer and disposal of non-hazardous solid waste; and other environmental solutions.
[in-text-ad]
The company’s collection services include curbside collection of material for transport to transfer stations, landfills or recycling processing centers; supply of recycling and waste containers; and renting of compactors. In addition, the company engages in the processing and sale of old corrugated containers, old newsprint, aluminum, glass and other materials, and in provision of landfill and transfer services.

The company also offers disposal of nonhazardous solid and liquid material and in-plant services, such as transportation and logistics. It serves small-container, large-container and residential customers. As of December 31, 2021, the company operated through 356 collection operations, 239 transfer stations, 198 active landfills, 71 recycling processing centers, six saltwater disposal wells and seven deep injection wells, as well as three treatment, recovery and disposal facilities in 41 states. It also operated 77 landfill gas-to-energy and renewable energy projects and had 124 closed landfills.

Republic Services stock investors receive a 1.52% dividend. The Goldman Sachs price target is $175. The $156.73 consensus target is closer to the most recent closing price of $129.64.

Walmart

The giant retailer posted mixed second-quarter results but remains a top idea in an inflationary environment, when consumers look for value. Walmart Inc. (NYSE: WMT) is the world’s largest retailer, operating retail stores under the formats of Walmart Stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States, as well as a growing e-commerce business. Internationally Walmart also operates locations in several countries, including Argentina, Brazil, Canada, China, Japan, Mexico and the United Kingdom.

Each week, nearly 260 million customers and members visit the company’s 11,535 stores under 72 banners in 28 countries and e-commerce websites in 11 countries. It had fiscal 2021 revenue of nearly $560 billion, and Walmart employs approximately 2.2 million associates worldwide.

Shareholders enjoy a 1.74% dividend. The Goldman Sachs price target of $155 compares to the $152.39 consensus target. Walmart stock closed almost 3% higher on Tuesday at $132.67.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

All these stocks have reasonable upside to the Goldman Sachs targets, and the companies all pay very dependable dividends. With even moderate appreciation in their share prices, investors should be looking at double-digit total return potential over the next 12 months. In a teetering market and a sputtering economy, these dependable companies make a ton of sense for nervous investors now, as we are likely in a recession already and interest rates are expected to go higher the rest of this year and into 2023.

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