Investors love dividend stocks because they not only provide dependable income but also give investors a great opportunity for solid total return. Total return includes interest, capital gains, dividends and distributions realized over a given period. In other words, the total return on an investment or a portfolio includes both dividend income and stock appreciation.
The Magnificent 7, which make up 28% of the S&P 500, have accounted for almost 65% of the yearly returns for 2023. In addition, the combined weight of those companies is greater than any combined weight of the top seven companies in the venerable index since the late 1990s. Selling partial positions in these tech giants and moving to large cap dividend leaders makes sense, especially with the Federal Reserve likely closing in on the end of the rate hikes.
We screened our 24/7 Wall St. research database looking for companies in the S&P 500 that were rated Buy at major Wall Street firms and that also paid the highest dividends in the venerable index. In addition, we focused on five companies that are very timely stocks to own for the rest of 2023.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
The stocks are listed by dividend size.
Altria
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.
In June, Altria purchased NJOY Holdings, which makes electronic cigarettes and vaping products, for a $2.75 billion consideration. Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer, which some feel is worth more than $10 billion and may be a segment of the company that could be sold. Given the public relations issues the company has faced this year, it could very well be on the chopping board.
The company has increased its dividend for 52 consecutive years and just announced another increase effective October 10, when the dividend moves to $0.98 per share from $0.94.
Shareholders now receive a 9.04% dividend. Jefferies has a $55 target on Altria stock, while the consensus target is $49.11. The stock closed on Wednesday at $43.04.
Verizon
This top telecommunications stock offers tremendous value at current levels. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
Verizon’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition.
The company also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.
Investors receive a 7.93% dividend. Morgan Stanley’s price objective is $44, and Verizon Communications stock has a consensus target of $40.19. Shares closed on Wednesday at $33.60.
Walgreens
This huge drugstore chain operator is a safe retail play for investors looking to add health care now, and it trades at a cheap 7.5 times 2023 earnings expectations. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.
The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services; this segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States; and six specialty pharmacies.
The Retail Pharmacy International segment sells prescription drugs and health and wellness, beauty, personal care and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as online and an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides and Ahumada in the United Kingdom, Thailand, Norway, the Netherlands, Mexico and elsewhere, and 550 optical practices, including 165 on a franchise basis.
The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.
Walgreens Boots Alliance stock comes with an 8.72% dividend. Cowen’s $41 target price is well above the consensus target of $32.31 and Wednesday’s closing share price of $21.84.
AT&T
This 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. Its 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.
Recent negative press over the potential clean-up of lead landlines has caused the stock to be crushed. However, with huge cash flow and a solid customer base, this could be a massive total return win as the dividend remains safe.
The dividend yield here is 7.36%. Wells Fargo has set a $20 price objective, and the consensus target is $18.58. AT&T stock closed on Wednesday at $15.55.
24/7 Wall St.Truist Financial
This company was created through a merger of SunTrust Bank and BB&T in 2019. Truist Financial Corp. (NYSE: TFC) provides banking and trust services in the southeastern and mid-Atlantic United States. Its deposit products include non-interest-bearing checking, interest-bearing checking, savings and money market deposit accounts, as well as certificates of deposit and individual retirement accounts.
The company also provides funding; asset management; automobile lending; bankcard lending; consumer finance; home equity and mortgage lending; insurance, such as property and casualty, life, health, employee benefits, workers compensation and professional liability, surety coverage, title, and other insurance products; investment brokerage; mobile/online banking; and payment, lease financing, small business lending, and wealth management/private banking services.
In addition, the company offers association, capital market, institutional trust, insurance premium and commercial finance, international banking, leasing, merchant, commercial deposit and treasury, government finance, commercial middle market lending, small business and student lending, floor plan and commercial mortgage lending, mortgage warehouse lending, private equity investment, real estate lending and supply chain financing services. It provides corporate and investment banking, retail and wholesale brokerage, securities underwriting and investment advisory services.
Investors receive a 7.25% dividend. Truist Financial stock has a $39 target price at Citigroup. The consensus target is $36.08, and shares closed at $28.37 on Wednesday.
These five top blue chip companies have struggled this year for a variety of reasons. While not as exciting as an AI chipmaker, they have paid significant dividends for years and likely will continue to do so. Their value and total return proposition offer investors who are more conservative some quality ideas for the rest of this year and in 2024.
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
