Just when the risk-on crowd was warmed up and ready to party, and everybody was cheering what many thought was dovish commentary from Federal Reserve Chair Jay Powell, the January job report dropped a bomb when it was announced Friday a stunning 517,000 jobs were added, versus expectations for 180,000.
While at the margin, it would seem like job additions are positive, the reality is there are currently two jobs open for every one job seeker, a situation that can ratchet up wage inflation fast as companies compete for employees. What this might translate to for investors is more rate hikes, likely 25 basis points in March and May, and then a protracted period in which the federal funds rate stays at 5.25% well into next year.
The bottom line is we think it is smart to sell this likely bear market rally and use the proceeds to buy stocks that pay good dividends and can act as a hedge against further downside. That means defensive companies. We screened our 24/7 Wall St. research database and found seven top stocks that are Buy rated, pay those good dividends and look well situated if the selling returns. 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 top tobacco company posted outstanding fourth-quarter results and still offers value investors an excellent entry point. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States.
The company provides cigarettes primarily under the Marlboro brand; cigars and pipe tobacco principally under the Black & Mild brand; and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal and Husky brands. It also provides on! oral nicotine pouches. The company sells its tobacco products primarily to wholesalers, including distributors, and large retail organizations, such as chain stores.
Altria also owns over 10% of Anheuser-Busch InBev, the world’s largest brewer. That position is worth over $10 billion dollars.
In addition to the outstanding results for the latest quarter, the company announced a huge $1 billion share buyback.
Investors receive a 7.91% dividend. Stifel has a $50 target price on Altria stock. The consensus target is $49.33, and the stock closed on Friday at $46.91.
Coterra Energy
This company was formed by the closing of the $17 billion merger of Cabot Oil & Gas and Cimarex Energy in 2021. Coterra Energy Inc. (NASDAQ: CTRA) is an independent oil and gas company engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs) in the United States. It primarily focuses on the Marcellus Shale, with approximately 177,000 net acres in the dry gas window of the play located in Susquehanna County, Pennsylvania.
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