Top Wall Street Strategist Says Buy Defensive Dividend Growth for the Rest of 2021

Tuesday’s big reversal should remind investors that some of the current realities, while not totally baked in as certainties, really need to be considered when portfolio planning for the rest of 2021. The biggest consideration is the giant move the stock market has made off the March 2020 lows. Much of the initial gains were filling in the massive hole dug in barely a month, but after the S&P 500 crawled back to where was before the sell-off, the market is up an additional 19% in less than a year.

In addition, despite the Federal Reserve dismissing the current increase of inflation as “transitory,” the reality is everything has gone higher in price. While the rate of the increases in pricing may pause, it is unlikely to go back down. Furthermore, at some point the Fed will have to stop buying bonds to suppress interest rates. When it does, we could have another “taper tantrum” like in 2013.

One of the best minds on Wall Street is BofA Securities Chief Investment Strategist Michael Hartnett, who makes the case that investors should rotate like many money managers on Wall Street are to what he terms as “defensive growth,” which includes sectors like consumer staples, big pharmaceuticals, dominant phone companies and utilities.

We screened the BofA Securities research universe looking for stocks rated Buy that are in those sectors and found five that look like solid ideas for growth investors who also like a dividend kicker. 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 and was hit recently 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 to shareholders. In December 2018, the company acquired 35% of Juul Labs, and it has purchased a 45% stake in cannabis company Cronus for $1.8 billion.

Shareholders receive a 6.88% dividend. BofA Securities has a $58 target on the shares, and the lower consensus price target is $53.45. Altria stock closed on Tuesday at $49.99 a share.

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