The Moody’s bank downgrades were poo-pooed by many across Wall Street as “late to the party.” Truth is, the United States is swimming in debt, as are consumers now that total credit card debt is over $1 trillion. Household debt is a stunning $17 trillion, and both are all-time records. Quietly, at the end of July another bank (albeit smaller than Silicon Valley and First Republic), Heartland Tri-State Bank in Kansas, bit the dust.
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The remarkable artificial intelligence rally this year has pushed the markets higher as fundamentals continue to deteriorate. With the potential for inflation to heat up again, it makes sense to take winnings now and move them to insured money markets (many yield 5% now) and, if you want to stay in the game, move to dividend-paying safe-haven stocks.

We screened our 24/7 Wall St. research database looking for defensive stocks that are Buy rated across Wall Street and come with dependable (and in many cases outsized) dividends. While the following eight stocks are Buy rated, 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. Given the issues the brewer has had this year, it may indeed be a candidate to be sold.

Shareholders receive an 8.50% dividend. Stifel has a $52 target price on Altria stock, and the consensus target is $44.93. The shares closed on Wednesday at $44.09.

Energy Transfer

This top master limited partnership is a safe play 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.

The company 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 December of 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.

Investors receive a 9.63% distribution. Morgan Stanley’s $17 price target is shy of the consensus target of $17.21. Energy Transfer stock closed on Wednesday at $12.98.
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IBM

This blue chip legacy tech giant still offers investors a solid entry point, and it posted solid second-quarter results. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of IT hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.

Analysts have cited the company’s potential in the public cloud as a reason for their positive outlook going forward. The cloud proved to be big in recent earnings reports, as did Red Hat, the software giant the firm bought in 2019. Red Hat’s open hybrid cloud technologies are now paired with the unmatched scale and depth of IBM’s innovation and industry expertise, and sales leadership in more than 175 countries.

IBM stock comes with a 4.55% dividend. The BofA Securities price objective of $160 compares with a $130.64 consensus target and Thursday’s closing print of $142.49.

Kohl’s

This top retailer still offers an excellent entry point and a big dividend, and back-to-school time is upon us. Kohl’s Corp. (NYSE: KSS) operates department stores in the United States. The company offers private label, exclusive and national brand apparel, footwear, accessories, beauty and home products to children, men and women customers. The company also sells its products online.

With the economy struggling, consumers increasingly are turning to discount retailers for clothes, food and many additional items, and Kohls has a legendary following of value-seeking customers that shop at the retailer through good and bad times. When the use of privately branded credit cards rises, so does the bottom line at the company.

Some top analysts feel that the bankruptcy at Bed Bath & Beyond will be a positive for the company as bargain-hunting shoppers look to retailers like Kohl’s. Note though that there is the potential for the company to lower its dividend.

The dividend yield here is 6.93%. TD Cowen has set a $30 price target. Kohl’s stock has a consensus target of $24.33, but shares closed at $27.80 on Wednesday.

This top chemical company with a sterling balance sheet is a solid buy 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.
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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.

LyondellBasell Industries stock investors receive a 4.90% dividend. The $109 Wells Fargo price target is higher than the consensus target of $100.42 and Wednesday’s close at $99.34.

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.

Shareholders receive a 5.10% dividend. Prudential Financial stock has a price target of $114 at J.P. Morgan. The consensus target is $96.54, and shares closed on Wednesday at $95.07.

Starwood Property Trust

This high-yielding real estate investment trust is run by real estate legend Barry Sternlicht and offers big-time total return potential. Starwood Property Trust Inc. (NYSE: STWD) operates in the United States, Europe and Australia through the following segments.
Starwood’s Commercial and Residential Lending segment originates, acquires, finances and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, including distressed or nonperforming loans.
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The Infrastructure lending segment originates, acquires, finances and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment.

The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade and non-investment grade rated CMBS comprising subordinated interests of securitization and resecuritization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts.

Investors receive a 9.19% distribution. The JMP Securities price target is $24, while the consensus target is $21.69. Starwood Property Trust stock had a $20.52 share price on Wednesday’s close.

Verizon Communications

This top telecommunications stock offers tremendous value at current levels. Verizon Communications Inc. (NYSE: VZ) provides communications, technology, information and entertainment products and services to consumers, businesses and governmental entities worldwide.

The Verizon Consumer Group provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements, and it offers fixed wireless access (FWA) broadband through its wireless networks. It also offers wireline services in the Mid-Atlantic and Northeastern United States, as well as the District of Columbia, through its fiber-optic network, Verizon Fios product portfolio and a copper-based network.

The Verizon Business Group provides wireless and wireline communications services and products, including data, video, conferencing, corporate networking, security and managed network, local and long-distance voice, network access, and various IoT services and products, as well as FWA broadband through its wireless networks.

The company has been hit hard over concerns over lead landlines, but Verizon posted solid second-quarter results as it reported an unexpected increase in wireless subscriber numbers.

The dividend yield is 8.00%. Morgan Stanley’s $44 target price compares with a $36.47 consensus target. Verizon Communications stock ended Wednesday trading at $32.71.

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These eight top companies all pay dependable dividends and should continue to fare well despite the possibility of another 25-basis-point rate increase in September, and even one near the end of the year. The problem now is market risk. We could be headed much lower if the banking system and geopolitical pressures remain and inflation storms back. With that in mind, it makes sense to scale buy these ideas over the next month or so, as August and September are typically the worst months of the year for stocks.

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