When only eight stocks accounted for the majority of the gains in the S&P 500 for the first quarter, there must be some incredible value lurking for investors, especially as we now head towards the “sell in May and go away” time of the year.
While many across Wall Street see a recession in our future, most likely late in the third quarter or early fourth quarter of this year, the ongoing interest rate increases may (but are not guaranteed to) end after the next Federal Reserve meeting. That means it may be time to start sifting through the stocks that have treaded water and look poised to head higher.
We screened our 24/7 Wall St. value and dividend stock research universe, looking for ideas that are blue chip leaders that also pay outsized dividends. With Treasury yields shrinking as worried investors pile into the safe-haven securities, we found seven top stocks that are Buy rated and have payouts of at least 5%, and in some cases a much higher dependable dividend.
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, which some feel is worth more than $10 billion and may be a segment of the company that could be sold. When Altria posted outstanding fourth-quarter results, it also announced a shareholder-friendly $1 billion stock buyback plan. Note that the company has increased its dividend for 52 consecutive years.
Shareholders receive an 8.46% dividend. Stifel’s $50 target price on Altria stock compares with a consensus target of $49.63 and the most recent close at $44.43.
Diamondback Energy
This red-hot energy play looks poised to press higher again. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas and New Mexico.
The company primarily focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin, as well as the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin.
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