Investing

The Bear Market Is Growling: 5 Dividend Aristocrats to Buy Now for Safety and Income

While most of the attention this past week has been focused on the conflict between Ukraine and Russia, the real problem for investors is the mounting inflation pressures that are at the highest levels in over 40 years. To make the situation worse, the Federal Reserve has been tardy to the party, and the coming interest rate hikes, while desperately needed, could put a big crimp in the economy. The consumer price index results for February came in right at expectations at 7.9% higher year-over-year, once again at a stunning 40-year high, as the cost of everything is rising, and rising fast.

With yields rising and the increase in the federal funds rate due to start next week, 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. That is because the 65 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, with the following attributes also mandatory for membership on the list:

  • Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
  • They must have an average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.


With the Fed poised to start raising rates, the Nasdaq close to bear market territory and the market starting to anticipate recession for the economy this year, we thought it would be a good idea to look for companies on the Dividend Aristocrats list that are in defensive sectors but poised to do well the rest of 2022.

The following five stocks hit our screens, all of which are Buy rated at top Wall Street firms. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Amcor

This very off-the-radar idea makes sense as the company makes products that are always needed and in demand. Amcor PLC (NYSE: AMCR) produces and sells packaging products in Europe, North America, Latin America and elsewhere.

The company’s Flexibles segment provides flexible and film packaging products in the food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care and other industries. The Rigid Packaging segment offers rigid containers for a range of beverage and food products, including carbonated soft drinks, water, juices, sports drinks, milk-based beverages, spirits and beer, sauces, dressings, spreads and personal care items, as well as plastic caps for various applications.

The company sells its products primarily through its direct sales force.

Amcor stock investors receive a 4.40% dividend. BofA Securities has $13.20 target price on the shares, and the consensus target is $12.56. The shares closed on Thursday at $10.90.

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