It is pretty clear after the worst first half for the S&P 500 in over 50 years that we are trapped inside a bear market that could have another 15% downside or more before it is all played out. The consumer price index expectation for tomorrow is at a stunning 8.8%. Even if the number comes in lower, it will still represent the worst inflation in over 40 years, and does not look to improve anytime soon.
So what are investors to do? Buying bonds in a rising interest rate is hardly a good idea, unless they are linked to inflation or are of the floating rate variety. At 24/7 Wall St. we think the best plan is to stick with stocks that are printing solid profits and paying big dividends.
We screened the BofA Securities US 1 list, which is the 37 top stock picks at the firm. We searched for the highest dividend-yielding companies and found six that look like incredible second-half ideas. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Ares Management
This stock delivers an above-average dividend to go with its solid growth potential. Ares Management Corp. (NYSE: ARES) operates as an alternative asset manager in the United States, Europe and Asia. The company’s Tradable Credit Group segment manages various types of investment funds, such as commingled and separately managed accounts for institutional investors, as well as publicly traded vehicles and sub-advised funds for retail investors in the tradable and non-investment grade corporate credit markets.
The Direct Lending Group segment provides financing solutions to small to medium-sized companies. The company’s Private Equity Group segment focuses on majority or shared-control investments primarily in undercapitalized companies. While the Real Estate Group segment invests in new developments and the repositioning of assets, with a focus on control or majority-control investments, and it originates and invests in a range of self-originated financing opportunities for middle-market owners and operators of commercial real estate.
Investors receive a 4.08% dividend. The BofA Securities price target is $110, well above the consensus target of $88.70 and the most recent close at $59.75 per share.
BlackRock
Many on Wall Street love this firm’s near-term growth potential, but also for the long term, and it is a top financial in the US 1 list. BlackRock Inc. (NYSE: BLK) is the largest asset manager in the world, with more than $5 trillion in assets under management. Its acquisitions of Merrill Lynch Investment Management and iShares transformed it from a fixed income manager into a multiproduct and multichannel giant, with roughly 40% of its assets under management overseas. It has leading franchises in exchange-traded funds (ETFs), institutional fixed income, alternatives and cash. It also operates Solutions, a leader in risk analytics.
The company’s strong historical and prospective dividend growth is underpinned by the high quality and diversified business model. Dividends have increased 18% annually over the past 10 years. Dividend growth likely will moderate but remains solid in the low teens, consistent with expectations for earnings growth in the years ahead.
Shareholders receive a 3.23% dividend. BofA Securities has a $972 price objective on BlackRock stock. The consensus target is lower at $751.90, and shares closed on Monday at $605.00 apiece.
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