5 Dividend Aristocrat Stocks to Buy That Could Weather Another Brutal Sell-Off

Investing

Published: May 20, 2020 7:26 am

The 2020 S&P 500 Dividend Aristocrats list includes 66 companies that have increased dividends (not just remained the same) for 25 years straight. Keep in mind, just because they are on this list now doesn’t mean that in the future they will not reduce their dividend.

Despite the continued rally from the March lows, many investors, both institutional and retail, remain very fearful of another leg back down. The huge amount of cash in money market funds seems to supports this. Top fund managers cite the potential for another outbreak of the coronavirus, while others remain concerned over the destruction of the economy and conditions that weary consumers may still have to face.

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We screened the 2020 Dividend Aristocrat list for stocks rated Buy in the BofA Securities research universe, and we found five that looked solid and safe for nervous investors.

AT&T

This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.

While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.

The company said this week it will immediately abandon Venezuela’s pay-TV market as U.S. sanctions prohibit its DirecTV platform from broadcasting channels that it is required to carry by the socialist administration of Nicolas Maduro. AT&T is the largest player in Venezuela’s pay-TV market and was one of the last major American companies still operating in the crisis-wracked country.

Investors receive a 7.18% dividend. BofA Securities has a $36 price target for the shares, while the Wall Street consensus target is $33.88. AT&T stock closed trading on Tuesday at $28.96 per share.

Coca-Cola

This company remains a top Warren Buffet holding and offers not only safety but also an incredibly strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Investors receive a solid 3.68% dividend. BofA Securities has set its price target at $53. The posted consensus target price is $52 and Coca-Cola closed trading at $44.54 on Tuesday.

Exxon Mobil

This is another safer long-term play for conservative investors, and the energy giant is trading at 17-year lows. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.