This has been a dreadful year for investors. Both the Nasdaq and the S&P 500 are still in bear market territory. With more rate hikes coming, and some of the biggest companies posting dreadful third-quarter results (and offering lackluster forward guidance), we could be in for a rough fourth quarter. Top strategists like Morgan Stanley’s Mike Wilson feel that the market could trade down to 3,000 to 3,200 before bottoming, and that would be a 20% decline from current levels.
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One positive when the stock market goes through a bear market year is that top companies that pay big and reliable dividends are tossed out like the proverbial baby with the bath water. We screened our 24/7 Wall St. equity research database looking for Buy-rated stocks of companies that paid at least a 4% dividend. The following seven stocks hit our screens, and all make sense for worried and frustrated investors looking for a safe harbor. It is important to remember though that no single analyst report should be used as a sole basis for any buying or selling decision.

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.

Its 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.

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.

AT&T stock investors receive a 6.34% dividend. Goldman Sachs has a $23 price objective, and the consensus target is $21.93. The stock closed on Wednesday at $18.14.

Citigroup

This top bank stock has bounced nicely off the lows, and Warren Buffett bought a massive $2.5 billion worth of shares back in the summer. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, governments a broad range of financial products and services.
Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
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Trading at a still very cheap 6.4 times estimated 2022 earnings, this stock looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.

Investors receive a 4.50% dividend. Oppenheimer’s $79 price target is a Wall Street high. The consensus target is $56.47, and Citigroup stock closed on Wednesday at 45.41.

Dow

This stock certainly offers investors growth and income potential. Dow Inc. (NYSE: DOW) is a leading materials science company and was formed from the merger of Dow and DuPont in 2017 and the subsequent spin-off 2019. The company is organized into three principal divisions: Performance Materials & Coatings (23% of EBITDA), Industrial Intermediates & Infrastructure (27%) and Packaging & Specialty Plastics (51%).

Dow’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. The Consumer Solutions segment consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses.

The Infrastructure Solutions segment consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses. Performance Materials & Chemicals consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses. The Performance Plastics unit consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

Shareholders receive a 6.23% dividend. Wells Fargo’s price objective for Dow stock is $55, while the consensus target is $49.61. Wednesday’s close was at $47.99 a share.

IBM

This blue-chip giant still offers investors an incredibly solid entry point as well as a massive dividend. International Business Machines Corp. (NYSE: IBM) provides integrated solutions and services worldwide. The company operates through 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.
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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.

For the third quarter, IBM posted revenue of $14.1billion, up 6% from a year ago and better than Wall Street’s consensus forecast. With a focus on artificial intelligence and hybrid cloud computing, the legacy technology giant could be poised for strong growth going forward.

IBM stock comes with a 5.08% dividend. BofA Securities has set a $145 price target, well above the $139.37 consensus target and Wednesday’s closing print of $135.01.

Intel

This legacy leader in semiconductors has been absolutely hammered, and while some feel it is a value trap, it is hard to count out the company that defined the semiconductor revolution. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.

The platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

The company announced in January it would invest significantly to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to automobiles. Intel says the 1,000-acre “mega-site” northeast of Columbus has room for as many as eight plants, known as “fabs.” The company estimates it would require a $100-billion investment to fully build and equip those plants.

The dividend yield here is 5.33%. The $32 Needham price target is less than the $34.27 consensus target for Intel stock. The closing share price on Wednesday was $27.21.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit. Kraft Heinz Co. (NASDAQ: KHC) was formed via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion of annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House. Warren Buffett holds a huge position in Berkshire Hathaway of 325 million shares.
Kraft Heinz is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally. Additional brands include Oscar Meyer, Maxwell House, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Shareholders receive a 4.32% dividend. Kraft Heinz stock has a $43 price target at Goldman Sachs. The consensus target is at $41.78, and shares closed on Wednesday at $36.91.
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Pioneer Natural Resources

Many Wall Street analysts love this stock as a pure crude oil play and, the company also employs a variable dividend strategy. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.

The company explores for, develops and produces oil, natural gas liquids (NGLs) and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas, and it owned interests in 11 gas processing plants.

Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer is a huge player in the Permian basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth going forward.

Investors receive a 7.70% dividend, which may vary from quarter to quarter. Piper Sandler’s $339 target price compares with a $282.22 consensus target. The final trade for Pioneer Natural Resources stock on Wednesday was at $265.49.

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These seven large-cap blue chips offer a degree of safety and some very big dividends, that can really help with the total return potential. The important aspect for nervous investors is that all these companies have been around for decades and are not going anywhere. With third-quarter earnings still in full swing, not all these companies have reported, so it may make sense to buy partial positions now and pick up the balance down the road.

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