It is almost hard to believe that at this time last year interest rates were still near zero. But with spiraling inflation threatening to totally derail the economy, the Federal Reserve has raised rates in an almost unprecedented fashion, and it is all but assured they will raise them again tomorrow. The difference this time is that after four straight 75-basis-point increases, the Fed is expected to lift the benchmark federal funds rate by only 50 basis points.
One group of stocks that generally fares well during a rising rate period is those in the value category. Value stocks are those trading at levels that are perceived to be below their intrinsic fundamentals. Characteristics of value stocks include high dividend yields and low price-to-book and low price-to-earnings metrics. In addition, value stocks typically have a bargain price, as investors see the company as unfavorable in the marketplace.
After a big fall rally, and with winter right around the corner, it makes sense now to look for value stocks with healthy dividends. With just over two weeks left in 2022, now is the time for tax-loss selling and to move those proceeds to some value winners that will be solid portfolio additions in 2023.
We screened our 24/7 Wall St. research database looking for top value ideas rated Buy across Wall Street that pay solid and dependable dividends. The following stocks hit our screens and look like top plays for 2023. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
AbbVie
This is a top pharmaceutical stock pick across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what might happen eventually with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. The company was concerned, so in June of 2019 it announced that it has agreed to pay $63 billion for rival drugmaker Allergan, the latest merger in an industry in which some of the biggest companies have been willing to pay a high price to resolve questions about their future growth. The purchase officially closed in May of 2020.
The bad news for shareholders is that AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.
Shareholders receive a 3.63% dividend. Morgan Stanley’s $182 Wall Street high target price is well above the consensus target of $159.83. The shares ended Monday trading at $165.32 apiece.
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.
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