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Investors can target stocks with strong dividends to ride out high market volatility. Alistair Berg/Getty Images This story is available exclusively to Insider subscribers. Become an Insider and start reading now. Higher-than-expected inflation has caused many Wall Street strategists to recalculate. Brian Belski, the top strategist at BMO Capital Markets, just cut his S&P 500 price target. Here are 42 stocks to consider for strong dividend growth as prices continue to surge. The biggest surprise in markets this year is just how persistent inflation has been. Central banks like the Federal Reserve were certainly caught flatfooted, as were Wall Street strategists — especially bullish ones like Brian Belski, the chief investment strategist at BMO Capital Markets.
For most of this year, Belski had the highest S&P 500 price target on the Street. But Belski no longer holds the title of biggest bull after he cut his target for the second time this year on Thursday. The revision came after September’s inflation report came in hotter than expected.
“What has changed? The simple answer is the inflation environment, which we underestimated with our previous forecast,” Belski wrote in an October 13 note announcing the new price target.
Although Belski expects inflation reports to remain hot, he’s still bullish. His revised S&P 500 target implies that the index will rise by a “more realistic” 19% in the fourth quarter to finish the year at 4,300. That would make a 10% loss after the index was down nearly 27%.
“Although we have tempered our enthusiasm, we truly believe that stocks can and should rebound from current levels,” Belski wrote. “The one caveat is that future trajectory is likely to follow more normalized patterns, a sharp departure from the pandemic stimulus-fueled gains of 2020-21 and the resulting YTD losses that unwound much of that excess.”
Focus on 42 stocks with solid dividend growth as inflation runs rampantBelski and his colleagues at BMO Capital Markets have nine investing strategy portfolios that can serve as models for investors. One such portfolio is the US dividend growth portfolio, which was down 5.5% in the third quarter and lagged the S&P 500 by 0.65% in that span but is still outperforming the index by 6% on the year, according to the firm. The portfolio yields 3.4%.
Below are the 42 stocks that are currently in the US dividend growth portfolio along with the ticker, sector, dividend yield as of October 10, and rating from BMO analysts for each.
1. Comcast Corporation Class A
Markets Insider Ticker: CMCSA
Sector: Communication Services
Yield: 3.5%
Rating: Not rated
2. Verizon Communications Inc.
Markets Insider Ticker: VZ
Sector: Communication Services
Yield: 6.7%
Rating: Not rated
3. Lowe’s Companies, Inc.
Markets Insider Ticker: LOW
Sector: Consumer Discretionary
Yield: 1.8%
Rating: Not rated
4. McDonald’s Corporation
Markets Insider Ticker: MCD
Sector: Consumer Discretionary
Yield: 2.4%
Rating: Outperform
5. Target Corporation
Markets Insider Ticker: TGT
Sector: Consumer Discretionary
Yield: 2.4%
Rating: Outperform
6. Altria Group Inc.
Markets Insider Ticker: MO
Sector: Consumer Staples
Yield: 8.9%
Rating: Not rated
7. PepsiCo, Inc.
Markets Insider Ticker: PEP
Sector: Consumer Staples
Yield: 2.7%
Rating: Not rated
8. Procter & Gamble Company
Markets Insider Ticker: PG
Sector: Consumer Staples
Yield: 2.8%
Rating: Not rated
9. Chevron Corporation
Markets Insider Ticker: CVX
Sector: Energy
Yield: 3.8%
Rating: Outperform
10. Ameriprise Financial, Inc.
Markets Insider Ticker: AMP
Sector: Financials
Yield: 1.8%
Rating: Not rated
11. Bank of America Corp
Markets Insider Ticker: BAC
Sector: Financials
Yield: 2.8%
Rating: Market perform
12. BlackRock, Inc.
Markets Insider Ticker: BLK
Sector: Financials
Yield: 3.3%
Rating: Market perform
13. Goldman Sachs Group, Inc.
Markets Insider Ticker: GS
Sector: Financials
Yield: 2.7%
Rating: Outperform
14. JPMorgan Chase & Co.
Markets Insider Ticker: JPM
Sector: Financials
Yield: 3.8%
Rating: Market perform
15. MetLife, Inc.
Markets Insider Ticker: MET
Sector: Financials
Yield: 3.2%
Rating: Not rated
16. Morgan Stanley
Markets Insider Ticker: MS
Sector: Financials
Yield: 3.6%
Rating: Outperform
17. Prudential Financial, Inc.
Markets Insider Ticker: PRU
Sector: Financials
Yield: 5.5%
Rating: Not rated
18. Regions Financial Corporation
Markets Insider Ticker: RF
Sector: Financials
Yield: 3.4%
Rating: Not rated
19. U.S. Bancorp
Markets Insider Ticker: USB
Sector: Financials
Yield: 4.6%
Rating: Not rated
20. Amgen Inc.
Markets Insider Ticker: AMGN
Sector: Healthcare
Yield: 3.3%
Rating: Market perform
21. Gilead Sciences, Inc.
Markets Insider Ticker: GILD
Sector: Healthcare
Yield: 4.7%
Rating: Market perform
22. Johnson & Johnson
Markets Insider Ticker: JNJ
Sector: Healthcare
Yield: 2.6%
Rating: Not rated
23. Medtronic Plc
Markets Insider Ticker: MDT
Sector: Healthcare
Yield: 3.2%
Rating: Not rated
24. Merck & Co., Inc.
Markets Insider Ticker: MRK
Sector: Healthcare
Yield: 3.2%
Rating: Market perform
25. Pfizer Inc.
Markets Insider Ticker: PFE
Sector: Healthcare
Yield: 3.6%
Rating: Outperform
26. UnitedHealth Group Incorporated
Markets Insider Ticker: UNH
Sector: Healthcare
Yield: 1.2%
Rating: Not rated
27. Honeywell International Inc.
Markets Insider Ticker: HON
Sector: Industrials
Yield: 2.3%
Rating: Not rated
28. Lockheed Martin Corporation
Markets Insider Ticker: LMT
Sector: Industrials
Yield: 2.8%
Rating: Not rated
29. Northrop Grumman Corp.
Markets Insider Ticker: NOC
Sector: Industrials
Yield: 1.4%
Rating: Not rated
30. Waste Management, Inc.
Markets Insider Ticker: WM
Sector: Industrials
Yield: 1.5%
Rating: Market perform
31. Apple Inc.
Markets Insider Ticker: AAPL
Sector: Information Technology
Yield: 0.6%
Rating: Not rated
33. Cisco Systems, Inc.
Markets Insider Ticker: CSCO
Sector: Information Technology
Yield: 3.8%
Rating: Not rated
34. International Business Machines Corporation
Markets Insider Ticker: IBM
Sector: Information Technology
Yield: 5.5%
Rating: Market perform
35. Microsoft Corporation
Markets Insider Ticker: MSFT
Sector: Information Technology
Yield: 1%
Rating: Outperform
36. Oracle Corporation
Markets Insider Ticker: ORCL
Sector: Information Technology
Yield: 2.1%
Rating: Market perform
37. Texas Instruments Incorporated
Markets Insider Ticker: TXN
Sector: Information Technology
Yield: 3%
Rating: Outperform
38. Eastman Chemical Company
Markets Insider Ticker: EMN
Sector: Materials
Yield: 4.2%
Rating: Not rated
39. LyondellBasell Industries NV
Markets Insider Ticker: LYB
Sector: Materials
Yield: 6.1%
Rating: Market perform
40. Mid-America Apartment Communities, Inc.
Markets Insider Ticker: MAA
Sector: Real Estate
Yield: 2.9%
Rating: Market perform
41. Prologis, Inc.
Markets Insider Ticker: PLD
Sector: Real Estate
Yield: 2.8%
Rating: Outperform
42. Edison International
Markets Insider Ticker: EIX
Sector: Utilities
Yield: 4.9%
Rating: Not rated
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