For growth and income investors, it makes sense now to look at blue chip dividend stocks with big and dependable payouts.
Investors who are more conservative are partying like it’s 1999. That’s because money market rates are at 4.75% and certificates of deposit are above 5%. 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 Federal Reserve rate hikes are finished. Or will there be one or two more 25 basis-point hikes in store for the markets? One thing is certain: we are likely near the end of the rate hikes.
We screened our 24/7 Wall St. 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 all these dividend 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.
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. Some feel that is worth more than $10 billion and may be a segment of the company that could be sold. Altria posted solid fourth-quarter results and also announced a shareholder-friendly $1 billion stock buyback plan. (See which 19 companies were caught trying to manipulate the free market.)
Investors receive a 9.18% dividend. Jefferies has a $55 target price on Altria stock. The consensus is $48.85. The shares closed on Friday at $42.71.
Citigroup
This top bank stock has rallied nicely off the lows, and 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. (See how megabanks have fared since the financial crisis.)
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 5.09% dividend. Oppenheimer’s $85 price target is a Wall Street high. Citigroup stock has a consensus target of just $52.46, and shares closed on Friday at 39.68.
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. It has 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 an 8.86% distribution. Mizuho has set an $18 price target, and the consensus target is $17.19. The shares closed at $13.72 on Friday.
Pfizer
This top pharmaceutical stock was one of the biggest winners in the COVID-19 vaccine sweepstakes. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes and sells biopharmaceutical products worldwide.
The company offers medicines and vaccines in various therapeutic areas, including the following:
- Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
- Biologics, small molecules, immunotherapies and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena and Braftovi brands
- Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga and Paxlovid brands.
- Pneumococcal disease, meningococcal disease, tick-borne encephalitis and COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba and the Prevnar family brands
- Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis and Cibinqo brands
- Amyloidosis, hemophilia and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX and Genotropin brands
The dividend yield here is 5.22%. The $42 Truist Financial price objective compares with a consensus target of $41.10. Pfizer stock ended Friday’s session trading at $30.65 a share.
Simon Property Group
Shares of this leading company have been pounded and are offering the best entry point since last year, and it is a strong idea for investors looking to play the commercial real estate subsector. Simon Property Group Inc. (NYSE: SPG) invests in real estate markets across the globe, engaging in investment, ownership, management and development of properties. The company primarily invests in regional malls, premium outlets, mills and community/lifestyle centers to create its portfolio.
Through its subsidiary partnership, Simon Property owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European real estate investment trust with over 260 shopping centers in 13 countries.
Simpon Property stock investors receive a 7.16% dividend. Stifel’s $139 target is well above the $129.07 consensus target and Friday’s close was at $106.15.
Truist Financial
This company was created through a merger of SunTrust Bank and BB&T in 2019 and it does much of its business in the fast growing south and southeast. 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.
The company 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.
In addition, Truist 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 7.66% dividend. Truist Financial stock has a $34 target price at Raymond James. The consensus target is $34.22. The shares closed at $27.16 on Friday.
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. (50 American company slogans that everyone recognizes.)
Verizon’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. The company’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.
The dividend yield is 8.43%. The Citigroup price objective is $40, and the consensus target is $39.51. Verizon Communications stock closed on Friday at $31.57.
None of these dividend stocks is likely to turn up on Reddit’s WallStreetBets stock bulletin boards. However, they are well suited for what could be a difficult end to 2023 as the economy sputters and rates stay high. These seven dividend stocks 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.
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