While Friday’s rally was a very pleasant surprise, the reality is we could be in for some very tough sledding this summer and into the fall. Federal Reserve Chair Powell has telegraphed a string of 50-basis-point increases for the rest of this year and into 2023, with a stated goal of getting the federal funds rate to the 3.25% to 3.50% level. With the current rate at 0.75% to 1.00%, that is a long road to travel.
With the highest inflation in 40 years, and a host of additional issues both at home and abroad, now is a very good time to move to top value stocks that pay dividends. Value stocks are typically defined as shares of a company with solid fundamentals that are priced below those of its peers, based on analysis of price-to-earnings ratio, yield and other factors. The BofA Securities Value 10 portfolio is quantitatively generated and is based on the firm’s proprietary BofA Securities versus consensus earnings surprise model plus three additional screening criteria. The universe the analysts use is the S&P 500.
We screened the Value 10 portfolio for the five stocks with the highest dividends. We found five top picks that could be big 2022 winners. While all are rated Buy at BofA Securities, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Best Buy
The need for the electronics and gear to set up a “work from home” office has been a huge tailwind for this leading retailer, and what started as a pandemic necessity has turned into a trend. Best Buy Inc. (NYSE: BBY) is a top specialty retailer of consumer electronics in the United States and Canada. As of January 30, 2022, it had 1,144 stores.
Those stores provide computing products, such as desktops, notebooks and peripherals; mobile phones comprising related mobile network carrier commissions; networking products; tablets covering eeaders; smartwatches; and consumer electronics consisting of digital imaging, health and fitness, home theater, portable audio comprising headphones and portable speakers, and smart home products.
Its stores also offer appliances, such as dishwashers, laundry, ovens, refrigerators, blenders, coffee makers and vacuums; entertainment products consisting of drones, peripherals, movies, music and toys, as well as gaming hardware and software, and virtual reality and other software products; and other products, such as baby, food and beverage, luggage, outdoor living and sporting goods.
In addition, Best Buy provides consultation, delivery, design, healthelated, installation, memberships, repair, set-up, technical support and warrantyelated services. The company offers its products through stores and websites under the Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Best Buy Mobile, Pacific Kitchen, Home, and Yardbird banners.
Shareholders receive a 4.12% dividend. The BofA Securities price target for Best Buy stock is $135, while the consensus target is $123.71. The shares closed trading on Friday at $86.36.
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