The market breathed a sigh of relief when the budget was recently kicked down the road. Yet, just before the Thanksgiving holiday, we will be right back where we were. The one constant for the stock market is that traders and investors do not like surprises or unknowns. So, it is very possible we could be in for a rough ride for the rest of 2023.
The best idea for investors may be to stick with companies where the risk factors are low and the total return chances are high. Again, total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.
We screened the S&P 500 stocks for the highest-yielding ones that were rated Buy by top Wall Street firms. The following six companies all make sense for investors concerned over the ongoing budget battle and the potential for deteriorating economic conditions. While all are rated Buy at top Wall Street firms, 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. Given the public relations issues the company has faced this year, it could very well be on the chopping board. (See which 19 companies were caught trying to manipulate the free market.)
The company has increased its dividend for 52 consecutive years and announced another increase effective October 10, when the dividend went to $0.98 per share from $0.94.
Shareholders now receive a 9.18% dividend. Jefferies has a $55 target price, while the consensus target is $48.89. Altria stock closed on Tuesday at $42.49.
Lincoln National
Insurance never goes out of style, and this is one of the top companies in the industry. Lincoln National Corp. (NYSE: LNC) operates multiple insurance and retirement businesses in the United States.
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