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7 Dividend Stocks For Investors Playing Defense

Wayne Duggan

These dividend stocks are reliable.

The stock market has been on a roller-coaster ride this year, dipping each time another round of tariff hikes spooks investors. At one point this spring, the S&P 500 lost more than $1.1 trillion in aggregate market capitalization in less than two weeks before rebounding to new record highs. In such an uncertain international economic environment, reliable dividends are one of the few things investors can count on. Here are seven high-yielding dividend stocks to buy for investors looking to play defense, according to Bank of America.

Dow (ticker: DOW)

Dow is a materials science company formed from the recent breakup of DowDuPont. Most of the new Dow's revenue comes from its segment in packaging and specialty plastics. Analyst Steve Byrne says Dow's plastics business has several tailwinds at the moment, including rising polyethylene prices, declining U.S. liquid natural gas, feedstock costs and seasonally strong demand. Despite issues with Dow's Saudi Aramco joint venture, Byrne says current dynamics in the global polyethylene market are favorable. Dow has a dividend yield of 5.6%. Bank of America has a "buy" rating and $62 price target for DOW stock.

Ford Motor Co. (F)

Investors punished Ford stock in recent years due to concerns over market competition and a cyclically weak global auto market. Analyst John Murphy recently upgraded Ford and said the company's earnings troubles may finally be in the rearview mirror. Murphy says Ford's restructuring and refocusing strategy will produce one of the freshest vehicle lineups in the industry over the next four years. Earnings growth should also drive earnings multiple expansion for Ford stock, he says. Ford has a 5.7% dividend yield. Bank of America has a "buy" rating and $14 price target for F stock.

Altria Group (MO)

Tobacco giant Altria is battling to overcome weakness in its core tobacco business, as smokeable and smokeless tobacco sales are down. For now, Altria is relying on pricing strength to offset declining volumes, but analyst Lisa Lewandowski says the long-term bullish thesis for Altria hinges on the company's recent investments in vaping leader JUUL Labs and cannabis producer Cronos Group (CRON). Altria has a 6.4% dividend yield. Bank of America has a "buy" rating and $66 price target for MO stock.

Oneok (OKE)

Oneok is a leading natural gas gathering, storage and transportation pipeline company. Analyst Dennis Coleman says Oneok's Elk Creek, Arbuckle II and MB4 frac projects should collectively generate a major earnings inflection starting in 2020. In addition, the company is investing in a natural gas liquids export facility. Coleman says Oneok's high-quality project backlog deserves a premium market valuation, and the company's long-term growth outlook helps offset near-term balance sheet concerns. ONEOK has a 4.9% dividend yield. Bank of America has a "buy" rating and $70 price target for OKE stock.

Occidental Petroleum Corp. (OXY)

Occidental made a big splash in 2019 when it outbid Chevron Corp. (CVX) and acquired Anadarko Petroleum Corp. (APC) for $38 billion. Following the news, analyst Doug Leggate upgraded Occidental and said the stock offers a rare combination of exceptional value, cash flow growth and sector-leading yield. Leggate says Occidental paid a steep price for Anadarko, but the deal should pay off in the long term as Occidental looks to unlock synergies, integrate Anadarko assets and deleverage its balance sheet. Occidental has a 6.1% dividend yield. Bank of America has a "buy" rating and $85 price target for OXY stock.

AT&T (T)

Analyst David Barden says AT&T stock is trading at its lowest earnings multiple in history, and the stock represents one of the best values in the entire S&P 500. Barden says the company's first-quarter earnings report wasn't as bad as the negative market reaction would suggest. AT&T's balance sheet is strong, and its core subscription-based business model is a stable source of cash flow for defensive investors, Barden says. AT&T has a 6% dividend yield. Bank of America has a "buy" rating and $37 price target for T stock.

Williams Companies (WMB)

Williams Companies is a pure-play U.S. natural gas infrastructure company. Coleman says signing new contracts, business execution and improving leverage will drive upside for Williams shares. The company's simplification initiative is complete, but Coleman says the market doesn't seem to appreciate management's commitment to de-risking the balance sheet and addressing cost of capital concerns. Coleman says management's goals of getting Williams' leverage ratio below 4.75 and gaining a BBB credit rating in 2019 are achievable. Williams has a 5.3% dividend yield. Bank of America has a "buy" rating and $31 price target for WMB stock.

Buy-rated stocks with big dividends:

-- Dow (DOW)

-- Ford Motor Co. (F)

-- Altria Group (MO)

-- Oneok (OKE)

-- Occidental Petroleum Corp. (OXY)

-- AT&T (T)

-- Williams Companies (WMB)



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