When only eight stocks accounted for the majority of the gains in the S&P 500 for the first quarter, there must be some incredible value lurking for investors, especially as we now head towards the “sell in May and go away” time of the year.

While many across Wall Street see a recession in our future, most likely late in the third quarter or early fourth quarter of this year, the ongoing interest rate increases may (but are not guaranteed to) end after the next Federal Reserve meeting. That means it may be time to start sifting through the stocks that have treaded water and look poised to head higher.
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We screened our 24/7 Wall St. value and dividend stock research universe, looking for ideas that are blue chip leaders that also pay outsized dividends. With Treasury yields shrinking as worried investors pile into the safe-haven securities, we found seven top stocks that are Buy rated and have payouts of at least 5%, and in some cases a much higher dependable dividend.

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

Altria

This maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer, which some feel is worth more than $10 billion and may be a segment of the company that could be sold. When Altria posted outstanding fourth-quarter results, it also announced a shareholder-friendly $1 billion stock buyback plan. Note that the company has increased its dividend for 52 consecutive years.

Shareholders receive an 8.46% dividend. Stifel’s $50 target price on Altria stock compares with a consensus target of $49.63 and the most recent close at $44.43.

Diamondback Energy

This red-hot energy play looks poised to press higher again. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas and New Mexico.

The company primarily focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin, as well as the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin.
Diamondback Energy also owns, operates, develops and acquires midstream infrastructure assets, including 770 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins.
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Investors receive an 8.05% dividend, though it is of the variable variety, which means it could change depending on production and profits. Piper Sandler has a $207 target price, and the Diamondback Energy stock consensus target is lower at $173.48. Shares most recently closed at $140.55.

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%).

The company’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.

Dow stock comes with a 5.12% dividend. The Credit Suisse price objective is $68. The consensus target is $57.95, and the shares last closed at $54.66.

Energy Transfer

The top master limited partnership is a safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.

Energy Transfer is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquid (NGL) and refined product transportation and terminaling assets; NGL fractionation; and various acquisition and marketing assets.

After the purchase of Enable Partners in 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
Through its ownership of Energy Transfer Operating (formerly known as Energy Transfer Partners), the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights and 28.5 million common units of Sunoco and the general partner interests, and 39.7 million common units of USA Compression Partners.
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The distribution yield is 9.75%. The $19 Morgan Stanley price target is well above the consensus target of $16.75. Energy Transfer stock was last seen trading at $12.51.

Prudential Financial

Shares of this top financial services and insurance company are cheap at current trading levels. Prudential Financial Inc. (NYSE: PRU) provides insurance, investment management and other financial products and services in the United States and internationally.

The company offers investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies to institutional and retail clients, as well as its general account. It also provides a range of retirement investment, and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors; and group life, long-term and short-term group disability, and group corporate-, bank- and trust-owned life insurance in the United States, primarily to institutional clients for use in connection with employee and membership benefits plans. It also sells accidental death and dismemberment, and other supplemental health solutions, and it provides plan administration services in connection with its insurance coverages.

In addition, Prudential Financial develops and distributes individual variable and fixed annuity products, principally to the mass affluent and affluent markets, and individual variable, term and universal life insurance products to the mass middle, mass affluent and affluent markets in the United States. Further, it provides third-party life, health, Medicare, property and casualty, and term life products to retail shoppers through its digital and independent agent channels. The company offers its products and services to individual and institutional customers through its proprietary and third-party distribution networks.

Prudential Financial stock investors receive a 6.04% dividend. J.P. Morgan upgraded the stock last week, and it has set its price target at $114. The consensus target is $96.15, and the most recent closing share price was $83.36.

Verizon

This top telecommunications stock offers tremendous value at current levels. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
Verizon’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition.
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The company also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.

Shareholders receive a 6.61% dividend. Verizon Communications stock has a $46 target price at Oppenheimer. The consensus target is $44.43, and shares ended last week trading at $39.48 apiece.

Walgreens

This huge drugstore chain operator is a safe retail play for investors looking to add health care now, and it trades at a cheap 7.5 times 2023 earnings expectations. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.

The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services; this segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States; and six specialty pharmacies.

The Retail Pharmacy International segment sells prescription drugs and health and wellness, beauty, personal care and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as online and an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides and Ahumada in the United Kingdom, Thailand, Norway, the Netherlands, Mexico and elsewhere, and 550 optical practices, including 165 on a franchise basis.

The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.

Investors receive a 5.32% dividend. Deutsche Bank’s $46 target price is well above the consensus figure of $40.51. Walgreens Boots Alliance stock closed most recently at $35.78.

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While none of these stocks are likely to turn up on Reddit’s WallStreetBets stock bulletin boards, they are well suited for growth and income investors during what could be an ugly rest of the spring and summer. All these stocks likely will hold their ground much better in an inflationary and recessionary stretch like the one we are firmly ensconced in now, and they should do so for some time to come.

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