September is doing what September often does, and the Robinhood traders who are long out of the money call options, and stocks they bought on margin are getting clipped pretty well. While September is often a volatile month, this year investors have been tagged with a witches’ brew of COVID-19, a bitter election fight, social unrest across the nation, stocks that are way overbought after a long rally and countless other issues.
The question for many investors is what to do now. Going to cash that pays nothing seems like a bad idea, and Treasury yields are at record lows, with prices all above par across the curve. What may make sense is to hunker down in safe dividend-paying stocks of companies with products that will not go out of demand, at least until the election is settled and we see a clear path forward.
We screened the entire BofA Securities research universe looking for safe stock ideas that pay dependable dividends and are rated Buy. We found five that nervous investors should rotate to now to wait out the coming political and geopolitical fireworks that could be on tap over the rest of the year.
While they all are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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.
WarnerMedia’s second-quarter 2020 operating revenue was $6.8 billion, down 22.9% year over year, with segment operating income contribution of $1.9 billion, down 18.4% from the year-ago quarter. AT&T estimated COVID-19 was responsible for $1.5 billion in lower sales at WarnerMedia. Turner’s advertising revenue plummeted 37%, to $796 million in the most recent quarter.
Investors receive a probably secure 7.46% dividend. BofA Securities has a $36 price target for the shares, and the Wall Street consensus target is $32.31. AT&T stock closed trading on Thursday at $28.04.
Bristol-Myers Squibb
This remains a solid pharmaceutical stock to own long term, and it is on the BofA Securities US 1 list. Bristol-Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.
The company reported strong second-quarter results that were largely ahead of Wall Street consensus, given the ongoing recognition of Celgene revenue. Bristol-Myers bought Celgene last year in a massive $74 billion acquisition. The posted quarterly earnings of $1.63 per share exceeded the Wall Street consensus estimate and were higher than the per-share earnings reported in the same period a year ago.
Shareholders receive a 3.05% dividend. The BofA Securities price target is $80, while the consensus target is $73.50. Bristol-Myers stock closed trading at $58.25 on Thursday.
Consolidated Edison
This old-school stock offers investors the stability and track record many seek now. Consolidated Edison Inc. (NYSE: ED) offers electric services to approximately 3.5 million customers in New York City and Westchester County; gas to around 1.1 million customers in Manhattan, the Bronx and parts of Queens and Westchester County; and steam to about 1,700 customers in parts of Manhattan.
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