Conservative investors are partying like it is 1999, as money market rates are at 4.5% and certificates of deposits are above the 5% level. Back at the turn of the century, CD yields hit 6.91% and it was smooth sailing for a few years. The question now is whether rate hikes are finished or there will be one or two more 25-basis-point hikes in store for the markets.
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One thing is for sure: we are likely near the end of the rate hikes. So, it makes sense for growth and income investors to look at blue chip stocks with big and dependable dividends. We screened our 24/7 large cap dividend universe looking for true blue chip stocks paying dividends near the money market and CD rate levels. Seven top companies checked all the boxes.
While these stocks are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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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 | MO Price Prediction) 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.
Fourth-quarter results were solid, and Altria also announced a very shareholder friendly $1 billion stock buyback plan.
Investors receive a 9.01% dividend. Jefferies has a $55 target price on Altria stock, and the consensus target on Wall Street is $49.14. The shares closed on Thursday at $43.72.
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Citigroup
This top bank stock has rallied nicely off the lows, and Warren Buffett bought $2.5 billion worth of stock back in the summer of 2022. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services.
The company offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. And it operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
Trading at a still cheap 7.3 times estimated 2023 earnings, Citigroup stock looks quite reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.
Shareholders receive a 5.05% dividend. The $85 Oppenheimer price target is a Wall Street high. and Citigroup stock has a consensus target of just $54.58. The shares closed trading on Thursday at $40.73.
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Dominion Energy
With one of the highest dividends in the sector, this top utility offers big total return potential. Dominion Energy Inc. (NYSE: D) is an American power and energy company that operates through the following four segments.
The Dominion Energy Virginia segment generates, transmits and distributes regulated electricity to approximately 2.7 million residential, commercial, industrial and governmental customers in Virginia and North Carolina.
The Gas Distribution segment is involved in the regulated natural gas sales, transportation, gathering, storage and distribution operations in Ohio, North Carolina, Utah southwestern Wyoming, and southeastern Idaho that serve approximately 3.0 million residential, commercial and industrial customers. It also has nonregulated renewable natural gas facilities in operation.
The Dominion Energy South Carolina segment generates, transmits and distributes electricity to approximately 782,000 customers in the central, southern and southwestern portions of South Carolina, and it distributes natural gas to approximately 435,000 residential, commercial, and industrial customers in South Carolina.
The Contracted Assets segment is involved in the nonregulated long-term contracted renewable electric generation and solar generation facility development operations, as well as gas transportation, liquefied natural gas (LNG) import and storage operations, and in the liquefaction facility.
Dominion Energy stock comes with a 5.81% dividend. The BMO Capital Markets target price of $54 compares with a $54.77 consensus target and Thursday’s close at $46.03.
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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.
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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.
The distribution yield is 9.21%. Mizuho has set a $18 price target. The consensus target is $17.29, and Energy Transfer stock closed at $13.72 on Thursday.
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Lincoln National
Insurance never goes out of style, and this is one of the top companies in the industry. Lincoln National Corp. (NYSE: LNC) operates multiple insurance and retirement businesses in the United States.
Its Annuities segment offers variable, fixed and indexed variable annuities. The Retirement Plan Services segment provides employers with retirement plan products and services, primarily in the defined contribution retirement plan marketplace. This segment offers individual and group variable annuities, group fixed annuities and mutual fund-based programs, as well as a range of plan services, including plan recordkeeping, compliance testing, participant education, and trust and custodial services.
The Life Insurance segment provides life insurance products, including term insurance, such as single and survivorship versions of universal life insurance. It offers variable universal life insurance, indexed universal life insurance products and a critical illness rider.
Investors receive a 7.05% dividend. Lincoln National stock has a $30 price objective at Goldman Sachs. That is higher than the $26.08 consensus target and Thursday’s closing share price of $24.76.
Truist Financial
This company was created through a merger of SunTrust Bank and BB&T in 2019. Truist Financial Corp. (NYSE: TFC) provides banking and trust services in the southeastern and mid-Atlantic United States. Its deposit products include non-interest-bearing checking, interest-bearing checking, savings and money market deposit accounts, as well as certificates of deposit and individual retirement accounts.
Truist also provides funding; asset management; automobile lending; bankcard lending; consumer finance; home equity and mortgage lending; insurance, such as property and casualty, life, health, employee benefits, workers compensation and professional liability, surety coverage, title, and other insurance products; investment brokerage; mobile/online banking; and payment, lease financing, small business lending, and wealth management/private banking services.
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In addition, the company offers association, capital market, institutional trust, insurance premium and commercial finance, international banking, leasing, merchant, commercial deposit and treasury, government finance, commercial middle market lending, small business and student lending, floor plan and commercial mortgage lending, mortgage warehouse lending, private equity investment, real estate lending and supply chain financing services. It provides corporate and investment banking, retail and wholesale brokerage, securities underwriting and investment advisory services.
Shareholders receive a 7.00% dividend. Citigroup’s price objective is $39, while the consensus target is $36.71. Truist Financial stock closed on Thursday at $29.27.
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Verizon Communications
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.
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.
Verizon Communications stock investors receive a 7.64% dividend. The Oppenheimer price objective is $43. The consensus target is $40.17. On Thursday, shares were last seen trading at $33.81.
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None of these stocks will likely turn up on Reddit’s WallStreetBets stock bulletin boards, they are very well suited for what could be a difficult end to 2023 as the economy sputters and rates stay high. These companies should hold their ground much better in an inflationary and recessionary stretch like the one we are in now and will likely remain in for some time to come.
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