Legendary Wall Street Strategist Says Buy Defensive Value Now: 9 Dividend Stocks Fit the Bill

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If there is one voice on Wall Street that we always listen to, it is Stifel’s Barry Bannister. We have watched and documented his market calls for years, some of which are among the most incredible and courageous ever made by a sell-side research chief equity strategist and his staff.
In the first quarter of 2020, as the COVID-19 pandemic was unfolding, the stock market was absolutely crushed. We saw a stunning decline of 34% from the February 19, 2020, high to the low on March 23. That high-velocity sell-off included a startling day on March 16 when the Dow Jones industrials dropped 12.9%, the second-biggest one-day drop after the disaster in 1987. The S&P 500 fell 12%, its third-biggest percentage drop, and the Nasdaq declined a staggering 12.3%, the biggest loss ever for the tech-heavy index.

Into the teeth of the withering sell-off, Bannister and the Stifel team had the foresight to make a prediction for a strong market bounce. On March 19, just four short days before the final surge of selling and investor capitulation on March 23, the Stifel prediction was for a relief rally that would carry the S&P 500 to the 2,750 level by April 30. On March 23, the index hit an intraday low of 2,191 and closed at 2,237.

In early April, as a surge of alarming news on the pandemic flooded the airwaves, Stifel came out and defended the call, telling clients to stand their ground. In the middle of April, as the rest of Wall Street was finally on board, they raised the end of April target to 2,950. On April 30, in line with the laserlike call from Stifel, the S&P 500 closed at 2,912, after hitting an intraday high of 2,930 and after trading to 2,950 the day before.

The calls got even better as 2020 wore on. Now Bannister is out with a roadmap to handle yet another withering stock market sell-off. This one was created by years of incredibly bad Federal Reserve policy, massive government spending and an administration that has crippled the energy industry and helped to foster the worst inflation in 40 years.

Plain and simple, the Stifel strategy is to go with defensive value stocks and selected growth stocks. Given the nervousness, we screened the defensive value sectors cited in the recent Stifel report and found nine stocks within those sectors that are Buy-rated across Wall Street and 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 maker of tobacco products offers value investors a great entry point now as it has been hit as cigarette sales have slowed. Altria Group Inc. (NYSE: MO) is the parent company of Philip Morris USA (cigarettes), UST (smokeless), John Middleton (cigars), Ste. Michelle Wine Estates and Philip Morris Capital. PMUSA enjoys a 51% share of the U.S. cigarette market, led by its top cigarette brand Marlboro.

Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. In March 2008, it spun off its international cigarette business to shareholders. In December 2018, the company acquired 35% of Juul Labs, and it has purchased a 45% stake in cannabis company Cronus for $1.8 billion.

Shareholders receive a 6.80% dividend. Deutsche Bank has a $60 target on Altria stock, and the consensus target is $57.04. The stock closed on Wednesday at $53.89 a share.

Atmos Energy

This utility stock is perfect for conservative investors looking for income. Atmos Energy Corp. (NYSE: ATO) engages in the regulated natural gas distribution and pipeline and storage businesses in the United States.
The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3 million residential, commercial, public authority and industrial customers. As of September 30, 2020, it owned 71,558 miles of underground distribution and transmission mains.

The Pipeline and Storage segment transports natural gas for third parties and manages five underground storage reservoirs in Texas. It also provides ancillary services to the pipeline industry, including parking arrangements, lending and inventory sales. As of September 30, 2020, it owned 5,684 miles of gas transmission lines.

Atmos Energy stock investors receive a 2.34% dividend. Morgan Stanley recently raised the $139 target price to $140. The consensus target is $124.88, and Wednesday’s closing share price was $115.92


The legacy telecommunications company has been going through a long restructuring, has lowered its dividend and has sold off or merged underperforming assets. AT&T Inc. (NYSE: T) provides telecommunications, media and technology services worldwide.

Its Communications segment offers wireless voice and data communications services and sells handsets, wireless data cards, wireless computing devices with carrying cases and hands-free devices through its own company-owned stores, agents and third-party retail stores.

AT&T also provides data, voice, security, cloud solutions, outsourcing and managed and professional services, as well as customer premises equipment for multinational corporations, small and midsized businesses, and governmental and wholesale customers. In addition, it offers broadband fiber and legacy telephony voice communication services to residential customers.

The company markets its communications services and products under the AT&T, Cricket, AT&T Prepaid and AT&T Fiber brand names. The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brand names.

Investors receive a 5.44% dividend. The Raymond James price objective is $26, while the consensus target is $24.08. AT&T stock closed at $21.30 on Wednesday.


This reliable dividend payer is also a very safe play for investors. Colgate-Palmolive Co. (NYSE: CL) is the stock to buy in consumer staples. The company continues to deliver solid execution and is one of the best-positioned in its staples sector, given its strong brands in attractive categories, particularly oral care.
Over half of total revenues (52%) are derived in faster-growth emerging economies, and the company maintains leading or near-leading market shares in Brazil, Russia, India and China. While those have markets slowed over the past year, a pickup in growth could be coming, especially with a weak dollar making products attractive overseas.

The dividend yield is 2.46%. The $88 Stifel price target compares with a consensus target for Colgate-Palmolive stock of $81.75. Shares closed on Wednesday at $77.49.

Johnson & Johnson

With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays, and vaccine demand could spike again. Johnson & Johnson (NYSE: JNJ) researches, develops, manufactures and sells various products in the health care field worldwide.

The Consumer Health segment offers baby care products under the Johnson’s and Aveeno Baby brands; oral care products under the Listerine brand; skin health/beauty products under the Aveeno, Clean & Clear, Neutrogena and OGX brands; acetaminophen products under the Tylenol brand; cold, flu and allergy products under the Sudafed brand; allergy products under the Benadryl and Zyrtec brands; ibuprofen products under the Motrin IB brand; smoking cessation products under the Nicorette brand; and acid reflux products under the Pepcid brand. This segment also provides women’s health products, such as sanitary pads and tampons under the Stayfree, Carefree, and o.b. brands; wound care products comprising adhesive bandages under the Band-Aid brand; and first aid products under the Neosporin brand.

The Pharmaceutical segment offers products in various therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension and cardiovascular and metabolic diseases.

The Medical Devices segment provides electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopedics products in support of hips, knees, trauma, spine, sports and other; advanced and general surgery solutions that focus on breast aesthetics and ear, nose and throat procedures; and disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery under the Acuvue brand.

Johnson & Johnson stock comes with a 2.55% yield. Citigroup has set a $210 price target. The lower consensus target is $190.39, and shares closed at $179.62 on Wednesday.


This consumer staples leader is another safe bet for nervous investors. Kimberly-Clark Corp. (NYSE: KMB) manufactures and markets personal care and consumer tissue products worldwide. It operates through the following three segments.

The Personal Care segment offers disposable diapers, swim pants, training and youth pants, baby wipes, feminine and incontinence care products, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Depend, Plenitud, Softex, Poise and other brands.
The Consumer Tissue segment provides facial and bathroom tissues, paper towels, napkins and related products under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brands.

The K-C Professional segment offers wipers, tissues, towels, apparel, soaps and sanitizers under the Kleenex, Scott, WypAll, Kimtech and KleenGuard brands.
The company sells its household use products directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets, as well as through other distributors and e-commerce. It sells away-from-home use products directly to manufacturing, lodging, office building, food service and public facilities, as well as through distributors and e-commerce.

Shareholders receive a 3.59% dividend. Kimberly-Clark stock has a $146 target price at Jefferies. The consensus target of $132.73 is just above Wednesday’s closing share price of $131.37.

Kraft Heinz

Even in tough times, everyone has to eat, and this company stands to benefit. Kraft-Heinz Co. (NASDAQ: KHC) was formed six years ago via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion of annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House.

This is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally. Additional brands include Oscar Meyer, Maxwell House, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Warren Buffett holds a massive position in Berkshire Hathaway of 325 million shares, which is a stunning 26.6% of the company’s stock float.

The stock comes with a 4.04% dividend and is on the BofA Securities US 1 list of top picks. The firm’s $48 price target is higher than the $43.17 consensus target. Kraft Heinz stock closed on Wednesday at $39.88.


This grocery chain giant is always a solid idea when the going gets rough, as people tend to go out less to eat. Kroger Co. (NYSE: KR) operates as a retailer in the United States. It operates combination food and drug stores, multi-department stores, marketplace stores and price impact warehouses.

Its food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood and organic produce. Its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products and toys.
The company’s marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys. The price impact warehouse stores provide grocery and health and beauty care items, as well as meat, dairy, baked goods and fresh produce items.
The company also manufactures and processes food products for sale in its supermarkets and online, and it sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia.

Shareholders receive a 1.67% dividend. The BofA Securities target price is $75. The consensus target for Kroger stock is just $55.29. The last trade on Wednesday was reported at $51.16 a share.


The legacy fast-food heavyweight is a solid pick when the economy goes south, and it is among the safest large-cap restaurant plays. McDonald’s Corp. (NYSE: MCD) operates and franchises McDonald’s restaurants in the United States and internationally.

The company’s restaurants offer hamburgers and cheeseburgers, chicken sandwiches and nuggets, wraps, fries, salads, oatmeal, shakes, desserts, sundaes, soft serve cones, bakery items, soft drinks, coffee, and other beverages, as well as a breakfast menu, including biscuit and bagel sandwiches, breakfast burritos, hotcakes and other sandwiches. As of December 31, 2021, the company operated 40,031 restaurants.

McDonald’s earnings jumped a strong 19% a beat estimates in the most recent period. Revenue rose 10% to $5.67 billion, also topping forecasts. In addition, same-store sales, which is a huge metric for the company, jumped 11.8%. While that number represented a big drop from prior quarters, it was much better than gloomy Wall Street expectations. U.S. comparison rose 3.5%, barely eclipsing the consensus target.

The dividend yield is 2.32% dividend. UBS has a Wall Street leading $290 target price. The consensus target of $279.09 is also well above the $244.01 per share close for McDonald’s stock on Wednesday.

Bannister does not anticipate a recession until 2023, and that could be averted if the Federal Reserve pauses the interest rate path that has been set out to tamp down the current spiraling inflation. That path includes two 50 basis point increases, in June and July, and possibly more of at this level at scheduled meetings for the rest of 2022.

Even if we do fall into a recession, the Stifel research notes that we are in the best U.S. jobs market in 60 years, and that could keep it mild compared to recessions in the past. With that noted, Bannister may have to dodge a bullet or two, as the definition of a recession is two consecutive quarters of negative gross domestic product. First-quarter 2022 GDP decreased at an annual rate of 1.4%, and should that happen in the second quarter, that would technically place the economy in recession now.

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