Investing
Sell Any August Rally as September May Be a Disaster: 7 Safe-Haven Dividend Buys
Published:
The writing could be on the wall, as the Moody’s downgrade was poo-pooed by many across Wall Street as “late to the party.” The truth is that the United States is swimming in debt, as are consumers, now that total credit card debt is now over $1 trillion, while household debt is a stunning $17 trillion. Both are all-time records.
Very 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. In addition, there could be some more big ratings downgrades for the banks on the way. This time, money center giants such as JPMorgan Chase are being mentioned as possible candidates for downgrades.
[in-text-ad]
The remarkable artificial intelligence rally this year has pushed the markets higher as fundamentals continue to deteriorate. With the potential for inflation to heat back up, it makes sense now to take winnings, move them to insured money markets (many now yield 5% or more) 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 safe-haven type stocks that are Buy rated across Wall Street and come with dependable and, in many cases, outsized dividends. Although these 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.
Investors receive an 8.80% dividend. Stifel’s target price on Altria stock is $52, and the consensus target across Wall Street is $49.44. Wednesday’s closing share price was $42.75.
American Electric Power
This industry-leading utility is also a solid dividend-paying company. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.4 million customers in 11 states.
The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
Many on Wall Street feel that AEP stock trades at a discount to its utility peers, and they feel it deserves a premium. Top analysts also think the company may sell generating assets and buy back shares with the proceeds, which also will be accretive.
Shareholders receive a 4.09% dividend. Morgan Stanley has a $101 price target, while the consensus target for American Electric Power stock is $97.82. Shares closed on Wednesday at $79.19.
[in-text-ad]
Energy Transfer
This top master limited partnership is a safer 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.
Energy Transfer stock comes with a 9.72% distribution. Morgan Stanley has set a $17 price target. The consensus target is $17.21, and shares closed almost 2% higher on Wednesday at $12.77.
24/7 Wall St.EPR Properties
This real estate investment trust (REIT) invests in some of the most popular entertainment companies. EPR Properties Inc. (NYSE: EPR) is a leading experiential net lease REIT, specializing in select enduring experiential properties in the real estate industry.
The company is focused on real estate venues that create value by facilitating out-of-home leisure and recreation experiences in which consumers choose to spend their discretionary time and money. It has nearly $6.7 billion in total investments across 44 states. The company adheres to rigorous underwriting and investing criteria centered on key industry-, property- and tenant-level cash flow standards, and it believes its focused approach provides a competitive advantage and the potential for stable and attractive returns.
The distribution yield here is 7.96%. The $54 JMP Securities target price is well above the consensus target of $43.71. EPR Properties stock closed trading on Wednesday at $43.28.
Southern Company
This large-cap utility leader makes sense for very conservative investors. Southern Company (NYSE: SO) engages in the generation, transmission and distribution of electricity. It constructs, acquires, owns and manages power generation assets, including renewable energy and battery energy storage projects. and sells electricity in the wholesale market.
[in-text-ad]
The company distributes natural gas in Illinois, Georgia, Virginia and Tennessee, as well as provides gas marketing services, wholesale gas services and gas pipeline investments operations. It constructs, operates, and maintains 75,924 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial and industrial customers.
It serves approximately 8.6 million electric and gas utility customers. It also owns or operates 30 hydroelectric generating stations, 24 fossil fuel generating stations, three nuclear-generating stations, 13 combined cycle/cogeneration stations, 44 solar facilities, 13 wind facilities, one fuel cell facility and one battery storage facility. And it provides products and services in the areas of energy efficiency and utility infrastructure. In addition, the company offers digital wireless communications and fiber optics services.
Southern Company stock investors receive a 4.00% dividend. Ladenburg Thalmann just started coverage on the stock. Its $72 target price compares with a consensus target of $73.87 and Thursday’s close was at $68.11.
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 7.00%. Verizon Communications stock has a $44 target price at Morgan Stanley. The consensus target is $40.13, and Wednesday’s close was at $33.27.
Walgreens Boots Alliance
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.
[in-text-ad]
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.
Shareholders receive a 6.46% dividend. The Cowen target price is $41. The consensus target was last seen at $33.53. On Wednesday, Walgreens Boots Alliance stock closed at $28.19 a share.
These seven top stocks are for various reasons trading incredibly cheap and offering investors very timely entry points. With that noted, it still may be very prudent to just start with buying partial positions as the market still has a plethora of issues to deal with, not the least of which is the ongoing inflation burden, the continued rise in interest rates and a sputtering economy despite current indications that all is well.
With August and September typically the worst months of the year for stocks, and the potential for black swan events always lurking, the traders’ adage “Nobody ever went broke taking a profit” makes sense now, especially if your tech portfolio has exploded. So take some profits now and stay long in safer dividend winners until 2024, then look for the market to move higher later in the year as the Federal Reserve may cut rates in the second half of next year.
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
