While the always bullish Wall Street community is probably well aware that stocks are trading way above normal price-to-earnings levels on a forward and trailing basis, it always seems difficult for them to tell investors those hard facts. The second look at gross domestic product came in slightly better than the first, at −0.6% versus −0.9%, but that still indicates that technically we are in a mild recession. Conditions could get much worse as 2022 drags on.
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The rally this summer looks like the quintessential bear market variety. When shares stumbled trying to cross the 200-day moving average and retreated lower recently, it was a clear sign that the run higher could be over. After years of loose money policy, the party is more than over. It is time to move assets to safe, dividend-paying companies to ride out the potential coming storm. With the possibility for a much worse recession looming, and inflation still ravaging consumers, the time to reallocate is now.
Often when income investors look for defensive companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for 2022 have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further:
- 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 massive downside move looming, and interest rates definitely headed higher, we thought it would be a good idea to look for companies on the Dividend Aristocrats list that are in defensive sectors and look poised to do well for the rest of 2022. Seven stocks hit our screens. 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.
Abbott Labs
This is a top pharmaceutical and med-tech stock with very solid growth potential. Abbott Laboratories (NYSE: ABT) manufactures and sells health care products worldwide.
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