Investors may have found a breather as the new week got off to a start, but the reality is that some investors started to get nervous after more than a week’s worth of losses. As investors get nervous about higher interest rates, they may start to look at the more defensive companies, which currently yield more than or close to the 30-year Treasury. they could offer a defensive stock position and still deliver some upside expected from stocks versus bonds.
24/7 Wall St. maintains on its watch list a slew of defensive dividend stocks that investors flock to during periods of uncertainty. The trick is to know which companies are appropriate at a given time and why these might be more attractive than their peers and rivals.
Five such stocks stand out at this time. The average yield among them is close to 3.7%, versus about 2.9% for the 30-year Treasury and 2.2% for the 10-year Treasury. All these stocks have upside to their consensus analyst price target, and all have backed off of their 52-week highs already.
AT&T Inc. (NYSE: T) has now closed on its DirecTV acquisition and it should now have even more dividend coverage for its high-yield dividend as a result. While much was noted about the stock pulling back, there was a wave of analyst upgrades this summer and the four-way pricing war may now be less of an issue with the huge satellite TV integration offering massive potential cost savings for the combined company.
Shares of AT&T were last seen at $34.65. The stock has a consensus analyst price target of $36.98 and a 52-week trading range of $32.07 to $36.45. It has a dividend yield of 5.5%, and shares are still down over 10% from the 2013 cycle-peak high over $38.00.