Even though some early first-quarter earnings have come in very solid, the reality is the market is teetering and could be ready to plunge. While the perpetually bullish Wall Street commentary is focused on “peak inflation” coming soon, it could get a whole lot worse before it gets better.
The sheer velocity of rates increasing across the Treasury curve is starting to scare even the perpetual bulls. When you toss in all the additional ingredients connected with inflation, the ongoing war in Ukraine and a host of additional gremlins, the going could get very tough for the rest of 2022.
With the federal funds rate set to increase 50 basis points in both May and June, safe corporate bonds are hardly the best idea now.
Often when income investors look for companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2022 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further. The following attributes are also mandatory for membership on the vaunted list:
- Companies must be worth at least $3 billion at the time of each quarterly rebalancing.
- The 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 a sizable correction looming, we thought it would be a good idea to look for companies on the Dividend Aristocrats list that are in sectors that are defensive but look poised to do well the rest of 2022. Eight stocks hit our screens, all of which are Buy rated 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.
Atmos Energy
This utility stock is perfect for conservative investors looking for income. Atmos Energy Corp. (NYSE: ATO) engages in the regulated natural gas distribution and pipeline and storage businesses in the United States.
The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3 million residential, commercial, public authority and industrial customers. As of September 30, 2020, it owned 71,558 miles of underground distribution and transmission mains.
The Pipeline and Storage segment transports natural gas for third parties and manages five underground storage reservoirs in Texas. It also provides ancillary services to the pipeline industry, including parking arrangements, lending and inventory sales. As of September 30, 2020, it owned 5,684 miles of gas transmission lines.
Atmos Energy stock investors receive a 2.26% dividend. Morgan Stanley recently lowered the $128 target price to $126. The consensus target is $118.71, and the most recent closing print was $119.74.
Cardinal Health
This is a solid way for growth and income investors who are more conservative to play the health care sector. Cardinal Health Inc. (NYSE: CAH) is one of the largest drug and medical product distributors. The company generates approximately two-thirds of its profit from the pharmaceutical business and nearly one-third from its medical business.
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