If you believe some of the top Wall Street strategists, the 2023 rally is almost over. J.P. Morgan said last weekend that the current rally is likely to be the high point for this year, while Morgan Stanley’s Mike Wilson, who made a strong bearish call last year, feels that lows for stocks will come in the spring, noting that risk-reward for investors now is “as poor as it has been.”
With inflation falling but still well above the Federal Reserve’s target, and the prospects for a terminal (or ending) federal funds rate now as high as 6% and remaining in place well into 2024, investors should shift to safer, high-dividend stocks that provide the best total return proposition for the rest of 2023.
We screened our 24/7 Wall St. equity/income universe for stocks that pay at least a 7% dividend, are Buy rated by top banks and brokerage firms, and offer investors the best total return potential. Six top companies made the cut, but 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. Altria posted outstanding fourth-quarter results and also announced a shareholder-friendly $1 billion stock buyback plan.
Shareholders receive a 7.96% dividend. Stifel has a $50 target price on Altria stock, and the consensus target is $49.65. The shares closed on Wednesday at $47.65.
Energy Transfer
This top master limited partnership (MLP) is a safe way for investors looking for energy exposure and income. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all the major domestic production basins.
The company is a publicly traded limited partnership with core operations that include complimentary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquid (NGL) and refined product transportation and terminalling assets; NGL fractionation; and various acquisition and marketing assets.
After the purchase of Enable Partners in 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
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