After a furious rally Wednesday that saw the beleaguered Nasdaq post a stunning 4.4% gain, giddy stock investors pushed all the major indexes higher after Federal Reserve Chair Jerome Powell told the world what many already knew: rate hikes will be lower going forward. With the December increase almost guaranteed to drop to 50 basis points, that will take the federal funds rate to 4.25% to 4.50%. While that is much higher than this time last year, it is a guarantee it will go higher still.
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While investors are hopeful that Thursday’s gigantic rally is the beginning of a new bull market, the reality is that layoffs are accelerating, inflation is still sky-high and, most importantly, the year-long interest rate increases will continue in the first quarter. When the terminal target is reached, it is likely to be in the 5.00% to 5.25% range.

Powell has made it clear that when the terminal rate level is attained, it will remain, as the mantra goes, “higher for longer.” That means any cut in the federal funds rate is unlikely until 2024, and importantly, the effect of interest rate increases is always lagging, so they will really start to be felt the next year.

We think it is smart to sell this likely bear market rally and use the proceeds to buy stocks that pay good dividends and can act as a hedge against further downside. That means hard assets. We screened our 24/7 Wall St. research database and found seven top stocks that are Buy rated, come with those good dividends and look well situated if the selling returns. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

ADM

This is a very solid play for rocky markets and is offering a very reasonable entry point. Archer Daniels Midland Co. (NYSE: ADM) processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company operates through the following segments.

The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing and further processing of oilseeds, such as soybeans, and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed, into vegetable oils and protein meals.

The Carbohydrate Solutions segment engages in corn wet milling and dry milling activities. It also converts corn into sweeteners, starches and bioproducts. Lastly, the Nutrition segment provides customer needs for food, beverages, health and wellness, and more.

Archer Daniels Midland stock investors receive a 1.66% dividend. Wolfe Research’s $117 price objective compares to a $100.08 consensus target and the most recent close at $96.43 a share.

This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
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The company also holds Permian Basin properties with approximately 306,000 net acres and Anadarko Basin properties located in Oklahoma with approximately 182,000 net acres. In addition, it operates natural gas and saltwater disposal gathering systems in Texas. The company sells its natural gas to industrial customers, local distribution companies, oil and gas marketers, major energy companies, pipeline companies and power generation facilities.

As of December 31, 2021, it had proved reserves of approximately 2,892,582 thousand barrels of oil equivalent, which include 189,429 thousand barrels of oil and other liquid hydrocarbons, 14,895 billion cubic feet of natural gas and 220,615 thousand barrels of natural gas liquids.

Shareholders receive a 9.17% dividend. Stifel has a $40 target price on Coterra Energy stock. The consensus target is $36.00, and shares closed on Thursday at $27.63.

Enterprise Products Partners

This is the largest publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) provides a wide variety of midstream energy services, including gathering, processing, transportation and storage of natural gas, NGL fractionation, import and export terminaling, and offshore production platform services.

One reason many analysts may have a liking for the stock might be its distribution coverage ratio. This ratio is well above 1 times, making it relatively less risky among the MLPs.

Investors receive a 7.77% distribution. The price target at UBS is $33. The consensus price target for Enterprise Products Partners stock is $31.55. Shares closed at $24.13 on Thursday.

Freeport-McMoRan

This is one of the top picks across Wall Street in its sector and an outside way to play the electric vehicle trend. Freeport-McMoRan Inc. (NYSE: FCX) is the world’s largest publicly traded copper and moly producer, as well as the eighth-largest gold producer. Its key operating and development assets are in Indonesia, North America, South America and Africa.
Highly leveraged toward copper mining, Freeport-McMoRan could be a big player in a scenario of rebuilding and repairing old and battered projects, and it clearly would benefit from stronger demand and higher prices for industrial commodities.
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Many across Wall Street see significant further upside potential to commodity prices over the next one to three years. In particular, this is due to accelerating demand growth, excluding China and supply constraints. They believe that this cycle is in the early stages, as key demand drivers should continue to grow. With copper rebounding recently, and the shares at a very reasonable entry point, those looking for commodity ideas could do well with this market leader.

The dividend yield here is 1.90%. The $55 Jefferies price target is well above the $38.51 consensus target. Freeport-McMoRan stock ended Thursday trading at $31.55.

Newmont

This is one of the largest mining companies and a solid buy for investors who are more conservative. Newmont Corp. (NYSE: NEM) is engaged in the production of gold.

Its North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in Nevada and Cripple Creek and Victor in Colorado. The South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Australia segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Africa segment consists primarily of Ahafo and Akyem in Ghana.

Newmont stock comes with a 4.81% dividend. BofA Securities has set its price objective at $64. The consensus target is $53.71, and shares closed on Thursday at $46.25.

ONEOK

The solid price of natural gas over the last year has helped to lift this top energy company, and it is a different way to play the energy sector. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and NGLs gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying MLP, ONEOK Partners.

The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.
Many on Wall Street remain positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

Shareholders receive a 5.87% dividend. ONEOK stock has a $65 price target at Raymond James. Note that the consensus target is higher at $67.88, and shares closed on Thursday at $65.62.
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Rio Tinto

Shares of this mining company could explode higher if the world economy rebounds strongly in 2023. Rio Tinto PLC (NYSE: RIO), the world’s second-largest mining company, has operations in Australia, Africa, the Americas, Europe and Asia. It is the world’s largest producer of aluminum, second largest producer of iron ore, and a top five producer of alumina, uranium, mined copper, export thermal and coking coal, and diamonds.

In addition, Rio Tinto is also involved in alumina production; primary aluminum smelting; bauxite mining; alumina refining; and ilmenite, rutile and zircon mining, as well as the provision of gypsum.

While the company pays dividends semi-annually instead of quarterly, and the current distribution is 10.08%, this mining powerhouse is a solid stock to own and trading at an incredible 5.58 times earnings. As it is way off the 52-week high, it makes for a good value idea now.

In U.S. dollars, the Goldman Sachs price target is $72.41, while the consensus target is $71.19. Rio Tinto stock closed at $69.58 on Thursday.

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While the bear market rally has been stunning, boosted by seasonality and marginally better incoming data, the reality is layoffs are growing and inflation may not ever abate to the Fed’s 2% target. Plus, with Republicans taking back control of the House of Representatives, the profligate government spending of the past two years likely will end, with the national debt at $31 trillion.

It makes sense to move money to these stocks that offer hard assets that are needed regardless of the state of the economy, and all are leaders in their respective sectors.

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