While most of the attention this past week has been focused on the potential for a conflict between Ukraine and Russia, the real problem for investors are the mounting inflation pressures, now at the highest levels in over 40 years. The Federal Reserve has been very tardy to the party, and the coming interest rate hikes, while desperately needed, could put a big crimp in the economy. Both the consumer and producer price index results for January came in above expectations, and despite positive retail sales last month, the cost of everything is rising, and rising fast.
With yields rising, and the increase in the federal funds rate expected to start in March, safe corporate bonds are hardly the best idea now. Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further. The following attributes also are mandatory for membership on the Dividend Aristocrats list:
- Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
- Average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
With the potential for a sizable correction looming, and interest rates headed higher starting next month, we thought it would be a good idea to look for companies on the Dividend Aristocrats list that are in sectors that are defensive but look poised to do well the rest of 2022.
Five stocks hit our screens. They are Buy rated at top Wall Street firms, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This old-school utility 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.
Consolidated Edison owns 62 area distribution substations and various distribution facilities; 39 transmission substations and 62 area stations; electric generation facilities with an aggregate capacity of 724 megawatts that run on gas and fuel oil; 4,348 miles of mains and 369,791 service lines for natural gas distribution; and one steam-electric generating station and five steam-only generating stations.
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