With Rates Still Rising, 7 Highest-Yielding Dividend Kings May Be the Best 2023 Stock Ideas

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While the latest consumer price index numbers came in right where Wall Street estimates were set, prices in December still rose 6.5% year over year. That is much better than November’s 7.1%, but it is still way above the Federal Reserve’s 2% target. Stocks rallied on the print, as the CPI saw the first monthly decline since December of 2020. Though some investors with itchy trigger fingers are ready to dive in, with earnings coming in a big way next week, slow and steady may be the route to go.

For those who remain nervous about the economy and the future, we have written often about the opportunities that the Dividend Aristocrats offer for long-term investors. These are the companies that meet the guidelines for inclusion and have raised their dividends every year for 25 consecutive years. In 2023, 65 stocks made the cut, and most remain top picks across Wall Street.

Investors seeking even greater dividend dependability may be drawn to the 2023 Dividend Kings. These are the 48 companies that have raised the dividends they pay to shareholders a stunning 50 consecutive years in a row or more. We screened the list looking for safe stocks that are Buy rated on Wall Street and found seven that look like great ideas now. 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. In March 2008, it spun off its international cigarette business. In December 2018 it acquired 35% of Juul Labs, but the stock was pounded last summer when the FDA announced a ban on all sales of Juul vape pens. This decision was made after pleas from government officials and public health institutes that say Juul is too focused on selling its nicotine products to high-schoolers. A court and the FDA granted Juul’s request for a stay on the ban, allowing the company to still sell the products while an appeal is made on the decision.

Back in the fall, the company, which at the height of its popularity dominated the market with its sweet flavors, agreed to pay $438.5 million in a settlement with 33 states and one territory over marketing its Juul product to teens. Altria announced recently that it is looking to end its noncompete agreement with Juul to compete more aggressively in the vape space on its own.

While this continues to get sorted out, it is a good bet that Altria stock investors will still receive a giant 8.09% dividend. Deutsche Bank’s target price is $46, and the consensus target is even higher at $49.07. The shares closed on Thursday at $45.40.

Coca-Cola

This remains a top Warren Buffet holding, as he owns 400 million shares. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.

The company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Investors receive a 2.84% dividend. Wells Fargo’s $70 target price for Coca-Cola stock compares with the $67.84 consensus target and Thursday’s close at $61.21.

Federal Realty Investment Trust

While real estate has been hit by rising interest rates, demand is still growing and hard assets are good in inflationary times. Federal Realty Investment Trust (NYSE: FRT) is a recognized leader in the ownership, operation and redevelopment of high-quality retail-based properties located primarily in major coastal markets from Boston to Washington, as well as San Francisco and Los Angeles.

Founded in 1962, Federal Realty’s mission is to deliver long-term, sustainable growth through investing in densely populated, affluent communities where retail demand exceeds supply. Its expertise includes creating urban, mixed-use neighborhoods like Santana Row in San Jose, California, Pike & Rose in North Bethesda, Maryland, and Assembly Row in Somerville, Massachusetts.

Federal Realty’s 105 properties include approximately 3,000 tenants in 24 million square feet and over 2,600 residential units. Federal Realty has increased its quarterly dividends to its shareholders for 52 consecutive years, the longest record in the real estate investment trust industry.

Unitholders receive a 4.32% distribution. Federal Realty Investment Trust stock has a Strong Buy rating with a $120 price target at Raymond James. The consensus is $114.68, and the shares closed at $109.59 on Thursday.

Hormel Foods

Even during difficult times, people still have to buy groceries, and this stock is a pure play in the consumer defensive arena. Hormel Foods Corp. (NYSE: HRL) develops, processes and distributes various meat, nuts and other food products to retail, food service, deli and commercial customers in the United States and internationally.

The company provides various perishable products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles and bacons, as well as such shelf-stable products as canned luncheon meats, nut butters, snack nuts, chilies, microwaveable meals, hashes, stews, tortillas, salsas and tortilla chips.

It also engages in the processing, marketing and sale of branded and unbranded pork, beef, poultry and turkey products. It offers nutritional food products and supplements, desserts and drink mixes, and industrial gelatin products. Its brands include Skippy, Spam, Hormel, Natural Choice, Applegate, Justin’s, Jennie-O, Café H, Herdez, Black Label, Sadler’s, Columbus, Gatherings, Wholly, Columbus, Planters, Planters Cheez Balls and Corn Nuts.

Shareholders receive a 2.35% dividend. The $54 Argus price target is well above the $46.66 consensus target on Hormel Foods stock. Thursday’s close was at $46.53.

Johnson & Johnson

With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays. Johnson & Johnson (NYSE: JNJ) researches, develops, manufactures and sells various products in the health care field worldwide.

Its Consumer Health segment offers baby care products under the Johnson’s and Aveeno Baby brands; oral care products under the Listerine brand; skin health/beauty products under the Aveeno, Clean & Clear, Neutrogena and OGX brands; acetaminophen products under the Tylenol brand; cold, flu and allergy products under the Sudafed brand; allergy products under the Benadryl and Zyrtec brands; ibuprofen products under the Motrin IB brand; smoking cessation products under the Nicorette brand; and acid reflux products under the Pepcid brand.

This segment also provides women’s health products, such as sanitary pads and tampons under the Stayfree, Carefree, and o.b. brands; wound care products comprising adhesive bandages under the Band-Aid brand; and first aid products under the Neosporin brand.

The Pharmaceutical segment offers products in various therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension and cardiovascular and metabolic diseases.

Its Medical Devices segment provides electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopedics products in support of hips, knees, trauma, spine, sports and other; advanced and general surgery solutions that focus on breast aesthetics and ear, nose and throat procedures; and disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery under the Acuvue brand.

Here, the dividend yield is 2.56%. Citigroup has set its price target at $205, well above the consensus target of $185.05. Johnson & Johnson stock closed at $174.00 on Thursday.

Northwest Natural

This off-the-radar utility stock is a good choice for worried conservative investors looking for income and safety. Northwest Natural Holding Co. (NYSE: NWN), through its subsidiary Northwest Natural Gas, provides regulated natural gas distribution services to residential, commercial, industrial and transportation customers in Oregon and southwest Washington.Northwest Natural also operates 5.7 billion cubic feet of the Mist gas storage facility contracted to other utilities and third-party marketers. It offers natural gas asset management services and operates an appliance retail center. In addition, it engages in gas storage, water, non-regulated renewable natural gas and other investments and activities.

The company provides natural gas service through approximately 786,000 meters in Oregon and southwest Washington, as well as water services to a total of approximately 80,000 people through approximately 33,000 water and wastewater connections in the Pacific Northwest and Texas.

Northwest Natural stock comes with a 3.94% dividend. The Maxim target price is $62, and the consensus target is $54.14. Thursday’s closing share price was $49.70.

Target

This big-box giant retailer had a difficult time last year but things appear to be improving. Target Corp. (NYSE: TGT) operates as a general merchandise retailer in the United States. The company offers food assortments, including perishables, dry grocery, dairy and frozen items. It offers apparel, accessories, home décor products, electronics, toys, seasonal offerings, food and other merchandise, as well as beauty and household essentials.

Target also provides in-store amenities, such as Target Café, Target Optical, Starbucks and other food service offerings. The company sells its products through its stores and digital channels, including Target.com. As of March 9, 2022, the company operated approximately 2,000 stores.

Despite its troubles, the company’s business appears to be stabilizing, and the stock actually was up over the final six months of 2022. Solid discounting to lure in customers has worked well, as customer traffic for the third quarter rose 1% while sales were up 3%.

Investors receive a 2.90% dividend. J.P. Morgan has a $201 target price. The consensus target is $174.32. Thursday’s final trade came in at $159.75 a share.

Any company that has paid shareholders dividends for 50 years or more is the epitome of safe and dependable. Toss in the fact that all these outstanding stocks have support from top Wall Street analysts, making them good ideas for nervous investors. In these turbulent times the old adage of “better safe than sorry” are words to live by for sure, especially given the multitude of events and situations that are threatening a stock market that ran way past its intrinsic value some time ago.

 

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