A word that barely has been mentioned on Wall Street over the past few years is reentering the lexicon. It is a familiar one to long-time stock investors: inflation. One thing that is driving the narrative is the big spike in interest rates. While the headlines seem to be touting imminent doom, the fact of the matter is that the benchmark 10-year yield is at 1.52% and the 30-year bond yields a paltry 2.30%. That is still not that far from the generational lows we saw over the past year.
While those who bought Treasury debt or lower-yielding investment-grade corporate debt over the past six months could be in big trouble as rates do move higher, income investors that prefer stocks with dependable dividends are still in a very sweet spot.
We reviewed the BofA Securities U.S. High Quality & Dividend Yield list for stocks rated Buy that pay a higher dividend than the 10-year and 30-year U.S. Treasuries, as well as the S&P 500 dividend yield, which is at a current 1.52%. We found five that have good prospects for the rest of 2021 and should continue to pay dependable dividends.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This stock has rallied nicely off the lows posted last year but still offers a solid entry point for investors. Emerson Electric Co. (NYSE: EMR) is a global technology and engineering company providing innovative solutions for customers in industrial, commercial and residential markets.
The company’s Automation Solutions business helps process, hybrid and discrete manufacturers maximize production, protect personnel and the environment while optimizing their energy and operating costs. The Commercial & Residential Solutions business helps ensure human comfort and health, protect food quality and safety, advance energy efficiency and create a sustainable infrastructure.
Shareholders receive a reasonable 2.31% dividend. BofA Securities has a $100 price target on the shares, while the Wall Street consensus target is $94. Emerson Electric stock closed on Thursday at $87.33 a share.
This company, like other major defense prime contractors, had a solid 2020, and the balance of 2021 looks solid as well. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.
Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.
Investors in General Dynamics stock receive a 2.65% dividend. The BofA Securities price target is $200, and the consensus estimate is $167.67. The last trade on Thursday hit the tape at $166.20.
Johnson & Johnson
With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays. Johnson & Johnson (NYSE: JNJ) is one of the top market cap stocks in the health care sector and raised its dividend this year for the 56th consecutive year.
With everything from medical devices to over the counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street. And now its COVID-19 vaccine appears to be on the verge of a widespread launch.