Federal Reserve Won't Raise Rates: 4 Safe Dividend Stocks to Buy Now

Investing

Published: February 12, 2016 10:35 am

Last Updated: January 13, 2020 1:15 pm

Well, the Chinese appear to have backed the Federal Reserve into a corner, and with our economy sputtering along at a very tepid rate, future increases in the fed funds rate not only look out of the question for this year, they may remain out of the question through 2017. With the Chinese currency pegged to the U.S. dollar, any increase in rates could send the Chinese into devaluation mode, which could prove awful for world financial markets.

So, now that the bad news is over, here is some good news. Some very safe dividend stocks, from sectors that are performing well now, make outstanding buys for income investors looking for safety. We screened for consumer staples, utilities and telecommunications stocks that make sense now in our Wall Street research database. Four look like outstanding choices.

AEP

American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the country. AEP also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

Many on Wall Street feel that the stock trades at a discount to its utility peers and should deserve a premium. Some top analysts think the company will sell generating assets and buy back shares with the proceeds, which will be accretive.

AEP is rated Buy at Merrill Lynch, and shareholders receive a 3.65% dividend. The Merrill Lynch price target is $62 but could be moved higher. The Thomson/First Call consensus target is $63.55. Shares closed on Thursday at $61.31.