Investing

9 'Strong Buy' Dividend Aristocrats to Buy Now in Case Elon Musk Is Right

In the history of the United States, there have been a handful of true visionaries that changed life and the world as we know it. Thomas Edison was one, with countless inventions, not the least of which was the electrification and incandescent lighting of the country. Alexander Graham Bell was another, with the invention of the telephone. And, of course, Henry Ford changed this nation from the horse and buggy to the automobile.

Elon Musk has joined that small sphere of genius innovators. He was one of the founders of PayPal, which revolutionized payments. He then went on to start Tesla, the world’s foremost electric vehicle company, and SpaceX, which is an American space manufacturer, a provider of space transportation services and a communications corporation. SpaceX was founded by Musk in 2002 with the goal of reducing space transportation costs to enable the colonization of Mars, among other goals.

When Musk has a “super bad feeling” about the economy and wants to cut about 10% of jobs at the electric carmaker, and JPMorgan’s Jamie Dimon echoes the same concerns and sentiments, it might be time for investors to look to conservative stocks that can survive what could be a very rocky rest of 2022 and 2023. Interest rates are going higher, and that is never good at the margin for stocks.

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 are also mandatory for membership on the vaunted list:

  • Companies must be in the S&P 500 index.
  • They must be worth at least $3 billion at the time of each quarterly rebalancing.
  • Their average daily volume must be at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.

With the potential for a huge correction still looming, and interest rates definitely going higher, 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.

Nine stocks hit our screens. They all 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.

AbbVie

This is a top pharmaceutical stock pick across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.

One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of 2020.

AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.

Shareholders receive a 3.83% dividend. Wells Fargo has a Wall Street high target price of $200 on AbbVie stock. The consensus target is $164.14, and the stock closed Friday trading at $147.17.

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