The market breathed a sigh of relief when the budget was recently kicked down the road. Yet, just before the Thanksgiving holiday, we will be right back where we were. The one constant for the stock market is that traders and investors do not like surprises or unknowns. So, it is very possible we could be in for a rough ride for the rest of 2023.
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The best idea for investors may be to stick with companies where the risk factors are low and the total return chances are high. Again, total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.
We screened the S&P 500 stocks for the highest-yielding ones that were rated Buy by top Wall Street firms. The following six companies all make sense for investors concerned over the ongoing budget battle and the potential for deteriorating economic conditions. While all are rated Buy 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.
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.
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. (See which 19 companies were caught trying to manipulate the free market.)
The company has increased its dividend for 52 consecutive years and announced another increase effective October 10, when the dividend went to $0.98 per share from $0.94.
Shareholders now receive a 9.18% dividend. Jefferies has a $55 target price, while the consensus target is $48.89. Altria stock closed on Tuesday at $42.49.
24/7 Wall St.Lincoln National
Insurance never goes out of style, and this is one of the top companies in the industry. Lincoln National Corp. (NYSE: LNC) operates multiple insurance and retirement businesses in the United States.
Lincoln National’s Annuities segment offers variable, fixed and indexed variable annuities. The Retirement Plan Services segment provides employers with retirement plan products and services, primarily in the defined contribution retirement plan marketplace. This segment offers individual and group variable annuities, group fixed annuities and mutual fund-based programs. Its range of plan services includes plan recordkeeping, compliance testing, participant education, and trust and custodial services.
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The Life Insurance segment provides life insurance products. These include term insurance, such as single and survivorship versions of universal life insurance. It offers variable universal life insurance, indexed universal life insurance products and a critical illness rider.
Investors receive a 7.43% dividend. The Goldman Sachs price objective for Lincoln National stock is $30. The $25.92 consensus target is closer to Tuesday’s closing price of $23.78.
24/7 Wall St.Pioneer Natural Resources
Many Wall Street analysts love this stock as a pure crude oil play, and the company employs a variable dividend strategy. Pioneer Natural Resources Co. (NYSE: PXD) operates as an independent oil and gas exploration and production company in the United States.
The company explores for, develops and produces oil, natural gas liquids (NGLs), and natural gas. It has operations in the Midland Basin in West Texas. As of December 31, 2021, the company had proved undeveloped reserves and proved developed non-producing reserves of 130 million barrels of oil, 92 million barrels of NGLs and 462 billion cubic feet of gas. It also owned interests in 11 gas processing plants.
Its production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.
The company is a huge player in the Permian Basin and the Eagle Ford in Texas. In fact, it owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. With a stellar balance sheet, the company is poised to remain a top player in the Permian, as it expects to deliver solid production growth going forward.
A purchase of the company by Exxon for nearly $60 billion was announced this morning, the legacy energy giant’s largest acquisition since the Mobil deal in 1999.
Pioneer Natural Resources stock comes with a 6.99% dividend, which may vary from quarter to quarter. The $332 Piper Sandler target price is well above the consensus target of $263.00 and Tuesday’s $237.41 close.
Truist Financial
This company resulted from 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.
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The company also provides the following:
- 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
- Payment, lease financing, small business lending and wealth management/private banking services.
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