While we are likely not close to the bottom of the market, the good news is that we are slowly but surely grinding and getting closer. The jobs data from last Friday, and what is likely to be another sobering consumer price index report on Thursday, have all but guaranteed that we are in for yet another 75-basis-point rate hike when the Federal Reserve governors attend their next meeting in early November. The question for stock investors is what to do now.
The temptation for many is to sift through the rubble and look for bargains, which are starting to really come to the surface with all the major indexes trading well into the down 20% bear market territory. However, the reality is that the market is teetering on the abyss and could be poised for another big move lower. It makes sense to look for bargains that pay big dividends and to start buying partial positions now and add as we trade down.
We screened our 24/7 Wall St. research database looking for blue chip names that are offering solid entry points and pay outstanding and dependable dividends. Many of these stocks have seen their dividends explode higher as the shares have hit 52-week lows. While all are rated Buy at top Wall Street firms, it is important to remember that no single analyst report should be used as the 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 this summer when the FDA announced a ban on all sales of Juul vape pens.
Altria has announced that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space. The company is rolling out its own heated and vapor products, such as Marlboro HeatSticks and IQOS, both of which are slowly being expanded across the United States.
The company pays out an 8.78% dividend. Deutsche Bank has a $46 target price on Altria stock. The consensus target is even higher at $48.83. The shares traded on Tuesday at $44.80.
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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