One negative result of lower interest rates is the effect it has on savers and people that rely on reasonably safe and secure income. After raising rates three times in 2018, the Federal Reserve reversed course in 2019 and lowered them. It also started a new version of quantitative easing that has moved the benchmark 10-year yield back to the same level it was back in the summer of this year and in November of 2016, at 1.73%.
Some feel that the 10-year yield can go lower, much lower. In fact, some analysts feel that the bond eventually will touch the 1.25% level, which would blow through the lows of the past 20 years. While that is great for those looking to buy or refinance a new home or other major purchases, it’s very rough for conservative investors who need a steady stream of income.
We screened our 24/7 Wall St. research database looking for stock income ideas that are rated Buy by major firms and offer consistent and dependable dividends. We found five top companies that make sense for those looking for a degree of safety but who are okay with buying stocks for income.
AbbVie
This is one of the top pharmaceutical stock picks across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth.
Shareholders receive a rich 5.53% dividend. Piper Jaffray has a $95 price target on the shares, and the Wall Street consensus target is $95.18. The stock closed trading on Thursday at $85.27, down over 2% on the day.
Altria
This maker of tobacco products still offers value investors a great entry point and was hit recently 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, one of the most valuable brands in the world.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders. In December 2018, the company acquired 35% of Juul Labs. The company also has purchased a 45% stake in cannabis company Cronus for $1.8 billion.
The negative press on vaping has been a big headwind, and the crash in marijuana stock prices have weighed on this worldwide leader. In addition, the legal age to buy tobacco products recently was raised to 21. Despite all the headwinds, investors are still able to buy the stock at a very reasonable price.
Investors will pocket a huge 6.58% dividend. The Merrill Lynch price objective is $60, while the consensus estimate is $54.61. Shares were last seen trading at $50.56.
Energy Transfer
This top energy master limited partnership is a very safe way 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, with a strategic footprint in all the major domestic production basins.
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