The most recent inflation report, which was worse than expected, raised concerns among investors about the Federal Reserve’s interest rate plans for this year. However, the central bank decided to keep rates steady in its latest decision, easing fears of an imminent hike. Combined with moderate gains in Q1 earnings reports, this led to a rebound in stocks as market confidence was restored.
Despite these positive developments, JPMorgan’s chief market strategist Marko Kolanovic warns that we may not be out of the woods just yet. He expresses concerns about a potential repeat of last summer’s drawdown, as well as other risks such as earnings projections, positioning unwind, and concentration reversal.
In such a situation, investors may turn to dividend stocks as a defensive play. These stocks offer reliable passive income streams, providing some stability even during market downturns. With this in mind, we have identified two stocks that fit a solid defensive profile – they have a Buy rating from analysts and offer up to an 8% dividend yield.
One of these stocks is Energy Transfer LP (ET), a major player in the North American midstream industry with a market cap of $53.5 billion. The company operates a vast network of assets for transporting and storing crude oil, natural gas, and other liquids, primarily in the Gulf Coast region. Despite reporting mixed results in its last quarterly report, Energy Transfer remains in a strong position in the midstream sector.
Energy Transfer has been steadily increasing its dividend payments, with the most recent hike bringing the forward yield to 8%. Mizuho analyst Gabe Moreen sees potential for continued growth in ET, citing the company’s attractive free cash flow yield and discounted valuation. Moreen has a Buy rating on the stock with a price target of $19, implying a 19.5% upside potential.
Overall, Energy Transfer has a Strong Buy consensus rating from analysts, with the stock currently trading at $15.89. The average price target of $18.44 suggests a 16% potential gain in the coming year. Investors looking for undervalued stocks may want to consider ET as a top pick for potential growth.