Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls

Seven dividend investments to purchase for profiting despite 2022 pitfalls should power ahead.

The seven dividend investments to purchase for profiting despite 2022 pitfalls offer high quality, inflation-protected dividend yield, value rather than growth, free cash flow (FCF) generation and more. Other reasons that led to their recommendation include fund positioning, a pension fund chairman’s input, 2022 earnings outlook versus consensus forecasts and other catalysts.

In addition, these seven dividend investments to purchase benefit more from inflation, rising interest rates, heightened gross domestic product (GDP), increased oil prices and wage growth, compared to an equal-weighted 11 sector portfolio. Six of the seven dividend investments to purchase for profiting despite 2022 pitfalls were picked by BoA Global Research, which gave analysis for each of its choices.

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The Fed’s Jan. 5 release of the minutes from its December Federal Open Market Committee (FOMC) meeting showed an increasingly aggressive plan to wind down quantitative easing (QE), raise the Fed Funds Rate and reduce the $9 trillion in debt on the Fed’s balance sheet, Bryan Perry wrote to his Cash Machine newsletter readers. The news impaired short-term investor sentiment and triggered heavy selling in the market’s favorite and dominant growth stocks in following few days, he added.

The only sectors holding up under the stress of broad market downside pressure have been energy, financials, consumer staples and utilities, Perry opined.

Paul Dykewicz interviews Bryan Perry, who heads the Cash Machine newsletter, as well as the Premium Income, Quick Income Trader, Breakout Profits Alert and Hi-Tech Trader trading services.

Exxon Mobil Is One of Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls

Exxon Mobil Corp. (NYSE: XOM) shares traded above $70 on Tuesday, Jan. 11, to reach a new 52-week high. The stock also pays a 5% dividend yield at that breakout level, said Perry, who has seen the stock rise as a current recommendation in his Cash Machine newsletter.

Chart of Exxon Mobil’s Annual Dividend Payments is courtesy of Stock Rover.

Exxon Mobil ranks as the only major oil company to emerge from the last five years with capacity for growth in free cash flow, according to BofA Global Research. But while claiming a rich opportunity slate, its chosen pace of investment is perceived as underestimating cyclical risks, BofA researchers wrote.

XOM proved capable of navigating COVID volatility but at a price, adding $20 billion to its balance sheet, and overshadowing prudent management of prior cycles, in contrast to peer companies that cut their dividends, BofA wrote. As BofA’s top Energy sector stock for 2022, Exxon Mobil is estimated to have the capacity to resume dividend growth on both an absolute and per-share basis, while restoring its balance sheet to pre-COVID levels.

Pension Chief Elevates Energy ETF Among Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls

Bob Carlson, who heads the Retirement Watch investment newsletter, said his top pick for conservative to moderate investors is Energy Select Sector SPDR ETF (XLE), featuring Exxon Mobil as the exchange-traded fund’s (ETF) top holding among 21 stocks. Carlson, who serves as chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, said energy stocks finished 2021 strongly, and most of the factors that propelled those gains will continue in 2022.

“Inflation is likely to remain high for much of 2022 and perhaps longer,” Carlson said. “Energy stocks traditionally are a good inflation hedge.”

Energy stocks had a strong finish in 2021, and most of the reasons that propelled those gains continue in 2022, Carlson commented. For example, inflation is likely to remain high for much of 2022 and perhaps longer, with energy stocks traditionally offering a good inflation hedge, Carlson added.

Plus, capital investments in the energy sector lagged the last few years, Carlson conveyed. Capital investments aren’t going to surge enough to increase supply anytime, he forecast.

“In fact, some governments are discouraging or prohibiting additional investments in traditional energy sources, and many banks and other capital sources reduced their exposure to the sector as part of their environmental policies,” Carlson said.

Energy Demand Is Likely to Exceed Supply, Unless a Recession Unexpectedly Occurs, Pension Chairman Predicts

The result is demand is likely to exceed supply for a while, absent a recession, Carlson counseled.

Many energy companies, especially the shale oil producers, have made it clear that they will be more shareholder friendly going forward, Carlson commented. Instead of investing heavily to maximize production, they will focus more on being profitable and ensuring shareholders have cash distributions and stock price appreciation, he continued.

Another factor favoring energy investments is that the dollar is likely to decline in 2022 against many other currencies, Carlson said. Oil and most other energy sources are priced in U.S. dollars, so a dip in the dollar should increase the prices of oil and other forms of energy, he added.

There are 21 stocks in the energy sector of the S&P 500. At the end of 2021, those stocks had a combined market value of about $1 trillion. That’s about a third of Apple’s (NASDAQ: AAPL) $3 trillion market value and a little more than the 2021 increase in AAPL’s market capitalization, Carlson said.

Pension fund and Retirement Watch chief Bob Carlson answers questions from columnist Paul Dykewicz.

From discussions with certain investors, a big issue that gained support from enough shareholders to win three of 12 Exxon Mobil board seats in a recent shareholder vote was less about climate and more about capital discipline and continuing a sustainable and growing dividend for the stock, BofA wrote. There is little doubt dividend sustainability came under scrutiny through the cyclical trough of 2020 and the company’s payout may increase in 2022 for the first time since 2019, BofA added.

Chart courtesy of www.stockcharts.com

Mondelez Joins Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls

Mondelez International, Inc. (NASDAQ: MDLZ), a multinational confectionery, food, holding and beverage and snack food company based in Chicago, Illinois, is BofA’s top pick in the Consumer Staples sector. BoA described Mondelez as a high-quality stock that has positive gross domestic product (GDP) and interest rate betas.

Based on analysts offering 12-month price targets for Mondelez International in the last three months, the average price target is $72 with estimates ranging from a high of $76 to a low of $67, according to NASDAQ.

The Keltner Channels below (built around a simple moving average line) show the low volatility surrounding Mondelez International’s rapid stock price increase.

Chart generated using Stock Rover.

However, Mondelez’s share price has soared recently, so the potential profit by investing in the stock now is not as large as it would have been a little more than a month ago. Nonetheless, Mondelez International gained a nod from BofA analysts.

Chart courtesy of www.stockcharts.com

Welltower Gains Spot With Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls

Welltower Inc. (NYSE: WELL), a Toledo, Ohio, real estate investment trust (REIT) that invests in health care infrastructure, is BofA’s preferred choice in the real estate sector. BofA cited the REIT’s “attractive dividend yield” of 2.9% as a reason to own its shares.

The $94 price objective for WELL set by BofA accounts for depressed earnings due to the COVID pandemic, as well as expectations of a multi-year period of above-average earnings growth due to a rebound in senior housing as the pandemic wanes. The stock’s price may outperform that estimate amid better-than-expected senior housing or medical office building performance, higher-than-forecast dividend growth and reduced interest rates.

But risks remain. They include public-pay reimbursement cuts, a more competitive acquisitions environment, weaker-than-expected senior housing fundamentals, increased tenant credit risk and rising interest rates, BofA noted.

Welltower has been one of the top holdings of one of Carlson’s recommended funds, Cohen & Steers Realty Shares (CSRSX). Cell tower firms and data storage companies have benefited from increased use of mobile technology and will do so, he added.

Chart courtesy of www.stockcharts.com

Seven Dividend Investments to Purchase for Profiting Despite 2022 Pitfalls Include Eastman Chemical

Kingsport, Tennessee-based Eastman Chemical (NYSE: EMN), an independent global specialty materials company that produces a broad range of advanced…