Over a month ago, Bank of America Chief Investment Strategist Michael Hartnett, one of the most respected voices on Wall Street, warned that most of the indicators he closely monitors were trading at or above the levels reached in March 2000, before the dot-com collapse. While the S&P 500 price-to-book ratio has fallen back somewhat from 5.1 in August to the current 4.7 level, even as stocks have skyrocketed over the past month to new all-time highs, the reality is that it is at 26 times trailing earnings. That is, the stock market is historically expensive.
We have covered Hartnett’s work for years here at 24/7 Wall St., and while he is by no means a perma-bear, he warned in a note to clients in August that “things better be different this time.” Refuting the bullish stance that often comes up during raging bull markets, when market indicators come in way above historical levels, and they all say, “It’s different this time.”
We decided to screen the BofA Securities stock research universe for companies that serve as proxies for the bond market. These include utilities, energy midstream companies, telecommunications companies, consumer staples, and net lease REITs, where the tenant assumes all property costs. Five top companies with stocks rated Buy at BofA Securities appear to be solid and safe ideas as we head into the final quarter of the year and on to 2026. While all are rated Buy, it is essential to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
Why do we cover dividend stocks?
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciation has contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations. A study by Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the 50 years from 1973 to 2023. Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
AT&T
AT&T Inc. (NYSE: T | T Price Prediction) is the world’s fourth-largest telecommunications company, measured by revenue. The legacy telecommunications company has been undergoing a lengthy restructuring process while maintaining a solid dividend of 3.75%. Seventeen analysts have given the stock a Buy rating, indicating comprehensive Wall Street support. AT&T provides a range of telecommunications, media, and technology services worldwide. Its Communications segment offers wireless voice and data communications services.
AT&T sells through its company-owned stores, agents, and third-party retail stores:
- Handsets
- Wireless data cards
- Wireless computing devices
- Carrying cases
- Hands-free devices
AT&T also provides:
- Data
- Voice
- Security
- Cloud solutions
- Outsourcing
- Managed and provided professional services
- Customer premises equipment for multinational corporations, small and mid-sized businesses, and governmental and wholesale customers
Additionally, this segment provides residential customers with broadband fiber and legacy telephony voice communication services.
It markets its communications services and products under:
- AT&T
- Cricket
- AT&T PREPAID
- AT&T Fiber
The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brands.
Bank of America has a $32 price target for the stock.
American Electric Power
This is one of the largest electric utility companies in the United States, serving more than 5 million customers across 11 states. This industry-leading utility pays investors a reliable dividend yield of 3.38%. American Electric Power Co. Inc. (NYSE: AEP) is an electric public utility holding company that generates, transmits, and distributes electricity for sale to retail and wholesale customers in the United States.
It operates through:
- Vertically Integrated Utilities
- Transmission and Distribution Utilities
- AEP Transmission Holdco
- Generation & Marketing
The company generates electricity using:
- Coal
- Lignite
- Natural gas
- Renewable energy
- Nuclear energy
- Hydro
- Solar energy
- Wind and other energy sources
It also supplies and markets electric power wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants.
The Bank of America price target is set at $114.
Colgate-Palmolive
This is a consumer staples giant that has been very conservative, paying a dividend every year since 1895, which currently stands at 2.40%. Colgate-Palmolive Co. (NYSE: CL) is a growth company focused on Oral Care, Personal Care, Home Care, and Pet Nutrition.
The company sells its products under brands, such as:
- Colgate
- Palmolive
- Elmex
- Hello
- Meridol
- Sorriso
- Tom’s of Maine
- EltaMD
- Filorga
- Irish Spring
- Lady Speed Stick
- PCA SKIN
- Protex
- Sanex
- Softsoap
- Speed Stick
- Ajax, Axion
- Fabuloso
- Murphy
- Soupline and Suavitel
- Hill’s Science Diet and Hill’s Prescription Diet
The Home Care product segment is managed geographically in five segments:
- North America
- Latin America
- Europe
- Asia Pacific
- Africa/Eurasia
All the segments sell primarily to a variety of traditional and e-commerce retailers, wholesalers, distributors, dentists, and skin health professionals.
The Pet Nutrition products include specialty pet nutrition products manufactured and marketed by Hill’s Pet Nutrition. The customers for Pet Nutrition products are authorized pet supply retailers, veterinarians, and e-commerce retailers.
Bank of America has a big $98 target price.
Enterprise Products Partners
Enterprise Products Partners L.P. (NYSE: EPD) is an American midstream natural gas and crude oil pipeline company headquartered in Houston, Texas. This company is one of the largest publicly traded energy partnerships, paying a reliable dividend of 6.76%. It provides various midstream energy services, including:
- Gathering
- Processing
- Transporting and storing natural gas, natural gas liquids (NGL), and fractionation
- Import and export terminalling
- Offshore production platform services
The company has four reportable business segments:
- Natural Gas Pipelines and Services
- NGL Pipelines and Services
- Petrochemical Services
- Crude Oil Pipelines and Services
One reason many analysts like the stock might be its distribution coverage ratio. The company’s coverage ratio is well above 1x, making it relatively less risky among the master limited partnerships.
Bank of America has a $38 price objective.
VICI Properties
This REIT is based in New York City and specializes in casino and entertainment properties. With a stellar dividend yield of 5.16%, this is one of the top picks across Wall Street in the net lease group. It is ideal for more conservative investors seeking gaming exposure and a substantial dividend. VICI Properties Inc. (NYSE: VICI) is an S&P 500 experiential REIT with one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including three iconic entertainment facilities on the Las Vegas Strip.
- Caesars Palace Las Vegas
- MGM Grand
- The Venetian Resort Las Vegas
VICI Properties owns 93 experiential assets across a geographically diverse portfolio of 54 gaming properties and 39 other experiential properties across the United States and Canada. The portfolio comprises approximately 127 million square feet and features approximately 60,300 hotel rooms, as well as over 500 restaurants, bars, nightclubs, and sportsbooks.
Its properties are occupied by industry-leading gaming, leisure, and hospitality operators under long-term, triple-net lease agreements.
VICI Properties has a growing array of real estate and financing partnerships with leading operators in other experiential sectors, including:
- Bowlero
- Cabot
- Canyon Ranch
- Chelsea Piers
- Great Wolf Resorts
- Homefield
- Kalahari Resorts
VICI Properties also owns four championship golf courses and 33 acres of undeveloped and underdeveloped land adjacent to the Las Vegas Strip.
The Bank of America price target is $34.
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