Finding Opportunity in Chaos: 3 Opportunities for Dividend Growth Investors

Let’s face it: fear is in the air. The risk of another financial crisis threatens banks. This started when Silver Gate Capital shut down its banking operations and created a contagion of banks also being affected (Silicon Valley Bank and Signature Bank). Investors have fled to safe assets like bonds and gold. Alongside this crisis is the threat of rising inflation and interest rates.

However, with panic on the street, opportunities for those strong enough to stomach volatility will arise. Quality companies with an excellent history and a strong balance sheet are becoming extremely attractive in terms of potential upside (and not to forget dividends). Investors who want to gain exposure to these types of companies can look at an elite list of dividend stocks called Dividend Aristocrats and Dividend Kings.

Dividend Aristocrats are an elite group of dividend-paying companies listed in the S&P500 that have continuously increased their dividends for at least 25 years. Dividend Kings are not necessarily listed in the S&P 500 but must have increased their dividends for at least the last 50 consecutive years. In these rare times, you can find dividend yields of up to 8% for these dividend elites. This type of dividend yield is very rare in companies of this size and stability. This article will look at the three highest-yielding stocks in those lists.

Altria Group (MO)

Altria Group is an international tobacco company with a market capitalization of $83.3 billion. 

Founded in 1902 and headquartered in Richmond, Virginia, United States, the company employs over 6,000 people. Its famous brands include Marlboro, Chesterfield, and L&M.

Altria Group primarily sells oral tobacco products and smokeable products. Among its accessories are cigarettes made and sold by Philip Morris USA Inc. and machine-made cigars and pipe tobacco by John Middleton Co. Altria Group Distribution Company, Helix Inventions LLC, Philip Morris Capital Corporation, and Altria Client Services LLC are further add-ons. The business offers deals and distribution services, support services, and various financial tools.

Altria Group has an annual dividend yield of 8.05% and a 5-year dividend growth rate of 44.88% and declared its first quarterly dividend for the year of $0.94, payable 04/28/2023. MO has continuously increased its dividends for 53 straight years.

Analyst and Barchart Ratings

Analysts rate Altria as a "Hold" with 4 Strong Buys, 7 Holds, and 2 Strong Sells from Analysts. MO's Mean Target price is $48.46 with a high estimate of $57.00 (an upside of 21.95%) in the next 12 months.

Barchart’s Opinion Rating rates Altria as an 88% Buy.

3M Company (MMM)

Famous for Post-It notes, the 3M Company is a conglomerate with operations in over 70 countries. It was founded in 1902, and the company has been essential during COVID-19, as it produces various products used in the healthcare industry, including face masks and hand sanitizer.  

Today, the company creates and markets a range of goods and services in four different segments: 

• Consumer, 
• Health care,
• Transportation and electronics, and 
• Safety & Industrial. 

Products like abrasives, artificial bonds, videotapes, and particular safety gears are under Safety and Industrial. Transportation safety equipment and systems for the automotive and aerospace sector are under the Transportation and Electronics segment. Oral care, medical diagnostics, and health information systems are under the Health Care Segment. Consumer health and safety products, office inventories, consumer respirators, etc. for its Consumer Care Segment. 

3M has an annual dividend yield of 5.8% and a 5-year dividend growth rate of 26.81%. MMM is expected to pay its 1st interim dividend for the year of $1.50 and has 

continuously increased its dividends for 66 straight years. 

Analyst and Barchart Ratings

Analysts rate MMM as a "Hold" based on 12 Holds, 1 Moderate Sell, and 3 Strong Sells. The mean target price is $119.85 and a high target price of 155.00 (an upside of 50.80%) in the next 12 months.

That said, Barchart’s Opinion rating is 100% Sell.

 Walgreens Boots Alliance Inc. (WBA)

Walgreens Boots Alliance is a consumer staples company that operates in healthcare, pharmacy, and retail. The company has a portfolio of consumer brands, including Walgreens and Boots.

Today, WBA offers products in three main segments: U.S. Retail Pharmacy, International, and U.S. Healthcare. The U.S. Retail Pharmacy segment operates retail drug stores and offers health and wellness services. Its international segment operates pharmacy-led health and beauty retail businesses outside the United States. The U.S. Healthcare segment is a consumer-centric healthcare business that uses technology to engage consumers across their care journey. 

Walgreens Boots Alliance Inc. has an annual dividend yield of 5.72% and a 5-year dividend growth rate of 24.84%. Based on its historical reporting schedule, WBA is expected to announce its next interim dividend in the last week of April. WBA has continuously increased its dividends

for 47 straight years.

Analyst and Barchart Ratings

Analysts rate MMM as a "Hold" based on 11 Holds, 3 Strong Buys, 1 Moderate Sell, and 1 Strong Sell. The mean target price is $41.64, and a high target price of 54.00 (an upside of 38.30%) in the next 12 months.

 That said, Barchart’s Opinion rating is a 100% Sell for WBA.

Final Thoughts

In the end, “Buy when there’s blood in the streets” has been a famous quote investors hear in times of financial crisis or when sell-offs happen. High-profile investors have indeed been quoted to have made a lot of money by buying battered stocks in times of crisis, as they have a lot of room to take on risk. However, investors should always practice prudence in times of market distress. Risk management and stock analysis should always be considered when choosing stocks with high dividend yield and potential upside.

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