While we have seen a monster rally run into some trouble in November, the reality is that the Federal Reserve likely will raise interest rates by yet another 75 basis points, which will lift the federal funds to 3.75% to 4.00%. The good news for investors is that many across Wall Street see the final or terminal rate at 4.75 to 5.00%. That likely would mean another 50-basis-point hike in December, one in the first quarter of 2023, and hopefully that will be the end of it.
While bonds and some sectors tend to get hurt in a risingate scenario, financials and others tend to prosper. We decided to screen our 24/7 Wall St. research universe for blue chip companies that, for whatever reason, have been ignored or abandoned and offer some strong total return potential for 2023 and big payouts for shareholders. Six made the cut, and all pay at least a 5% dividend and are Buy rated.
While all are rated Buy on Wall Street, 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. In March 2008, it spun off its international cigarette business. In December 2018 it acquired 35% of Juul Labs, but the stock was pounded last summer when the FDA announced a ban on all sales of Juul vape pens.
In October, the company, which at the height of its popularity dominated the market with its sweet flavors, agreed to pay $438.5 million in a settlement with 33 states and one territory over marketing its Juul product to teens. Altria announced recently that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space on its own.
While this finally gets sorted out, it is a good bet that investors still will receive that 8.13% dividend. Stifel has a $50 target price, and the consensus target is $48.97. Altria stock closed on Tuesday at $46.14 a share.
AT&T
The 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.
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