While it was fun while it lasted, as we have discussed before, inevitably, after vicious sell-offs like the one we saw from the market peak in February, which pushed the S&P 500 and the Nasdaq quickly into a brief bear market 20% decline territory, there is the potential for stunning bear market rallies. Almost every time, the snapback rally is a hedge fund and algorithmic trader contingent covering short positions, not a slew of new, excited long-term investors. While stocks have reset lower, there could be more downside before we see a real volume-led turnaround.
One of the best and safest ways to stay invested now is to consider moving some capital to the Dividend Monarchs. Like the Dividend Kings, the Dividend Monarchs are a group of stocks that have raised the dividend they pay to shareholders for at least 50 consecutive years. The difference between the Dividend Kings and the Dividend Monarchs boils down to the inclusion criteria required to be a member. To become a member of the Dividend Monarchs Index, stocks must:
- Be a member of the S&P Composite 1500 Index.
- Have a float-adjusted market capitalization of at least $2 billion.
- Maintain a three-month average daily trading value of $5 million or more.
We screened the 39 companies in the S&P Dividend Monarch index and found four perfect safe-haven stocks for worried investors.
Why do we cover the Dividend Monarchs?
An S&P Dow Jones Indices report dated April 30, 2023, noted that the Dividend Monarchs Index outperformed both the broader market and the S&P Composite regarding return on equity and showed more consistent earnings. In addition, index members offer lower volatility and defensive characteristics that help during market sell-offs.
Johnson & Johnson
This American multinational corporation specializes in pharmaceuticals, biotechnology, and medical devices. Johnson & Johnson (NYSE: JNJ | JNJ Price Prediction) is among the most conservative of the major pharmaceutical companies with a diverse product portfolio and a familiar, solid brand. The company researches, develops, manufactures, and sells a range of healthcare products. Its primary focus is products related to human health and well-being.
It operates through two segments:
- Innovative Medicine
- MedTech
The Innovative Medicine segment is focused on various therapeutic areas, including:
- Immunology
- Infectious diseases
- Neuroscience
- Oncology
- Pulmonary hypertension
- Cardiovascular and metabolic diseases.
Products in this segment are distributed directly to retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use.
The MedTech segment encompasses a diverse portfolio of products utilized in orthopedics, surgery, interventional solutions, cardiovascular intervention, and vision. It also offers a commercially available intravascular lithotripsy (IVL) platform for the treatment of coronary artery disease (CAD) and peripheral artery disease (PAD).
Citigroup has a Buy rating with a $185 target price.
PepsiCo
This top consumer staples stock posted solid fourth-quarter earnings. And worldwide food and beverage company PepsiCo Inc. (NYSE: PEP) will continue to supply all the goods for the 2025 summer tailgates and parties.
Its Frito-Lay North America segment offers:
- Lays and Ruffles potato chips
- Doritos, Tostitos, and Santitas tortilla chips
- Cheetos cheese-flavored snacks, branded dips
- Fritos corn chips
The company’s Quaker Foods North America segment provides:
- Quaker Oatmeal
- Grits
- Rice cakes
- Natural granola and oat squares
- Pearl Milling mixes and syrups
- Quaker Chewy granola bars
- Cap’n Crunch cereal
- Life cereal
- Rice-A-Roni side dishes
PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:
- Pepsi
- Gatorade
- Mountain Dew
- Diet Pepsi
- Aquafina
- Diet Mountain Dew
- Tropicana Pure Premium
- Sierra Mist
- Mug brands
Citigroup has a Buy rating to go with a $170 target price.
Target
This American retail corporation has a chain of discount department stores and hypermarkets. This stock remains a solid and safe retail total return play despite rough public relations issues over the past few years. Target Corp. (NYSE: TGT) is a general merchandise retailer in the United States. It offers apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as jewelry, accessories, and shoes. The company also offers beauty and personal care products, baby gear, cleaning, paper, and pet supplies.
Target also provides:
- Dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, and food service
- Electronics, which includes video game hardware and software
- Toys, entertainment, sporting goods, and luggage
- Furniture, lighting, storage, kitchenware, small appliances, home décor, bed, and bath
- Home Improvement
- School/office supplies
- Greeting cards, party supplies, and other seasonal merchandise
In addition, the company sells merchandise through periodic design and creative partnerships, shop-in-shop experiences, and in-store amenities. It also sells its products through its stores and digital channels, including Target.com.
Oppenheimer has an Outperform rating to go with a $165 target.
Lowe’s Companies
This company is one of the best big-box retailers to own now, and with the potential for a recession, do-it-yourself consumers could lead the way. Lowe’s Companies Inc. (NYSE: LOW) is a home improvement company that offers a complete line of products for construction, maintenance, repair, remodeling, and decorating.
It offers home improvement products in various categories, including:
- Appliances
- Seasonal and outdoor living
- Lumber
- Lawn and garden
- Kitchens and baths
- Hardware
- Building materials
- Millwork
- Paint
- Rough plumbing
- Tools
- Electrical, flooring
- Decor
It is focused on offering a wide selection of national brand-name merchandise complemented by its selection of private brands. Its services include installed sales and Lowe’s Protection Plans and Repair Services.
The company offers installation services through independent contractors in many product categories. It offers extended protection plans for certain products within the appliances, kitchens and bath, decor, millwork, rough plumbing, electrical, seasonal, outdoor living, tools, and hardware categories.
Lowe’s Companies operates over 1,700 home improvement stores.
Telsey Advisory has an Outperform rating with a $305 target price.
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