These stocks pay a steady dividend and are favored by analysts

Published Thu, Apr 1 202112:15 PM EDT

Jesse Pound @/in/jesse-pound @jesserpound

With bond yields rising in recent months and the market's biggest stocks still sluggish after a strong 2020, investors may be looking for safe dividend plays to beef up their portfolios. Yields move inversely to prices, meaning that existing bondholders are seeing the value of their holdings go down. The rise in yields has put pressure on long-duration, or growth, stocks this year, but tend not to be negative for equities on the whole. "Contrary to popular belief, interest rates and equities have historically moved in the same direction. In all seven rising-rate environments since 1990, the S & P 500 index has been higher," Wells Fargo said in a note this week. Those factors mean that dividend stocks may be a smart way for investors to find income without having the value of their holdings diminished by a rising interest rate environment. The stocks on the list above, created using FactSet, have dividend yields above 2%, putting them comfortably ahead of the average company in the S & P 500 and the benchmark 10-year Treasury yield. They also have buy ratings from at least 50% of the analysts covering them, indicating that Wall Street experts think the stocks still have upside. Additionally, the companies on the list have a healthy Altman Z-score , which is a measure of creditworthiness that uses metrics like profitability and liquidity to estimate the likelihood that a non-financial company will go bankrupt. As companies are often forced to cut dividends before they enter bankruptcy, a strong Altman Z-score also signals a resilient dividend. The stock on the list with the highest dividend yield is tobacco company Philip Morris . Shares of the company rose more than 7% during the first quarter, outpacing the broader market. Philip Morris has also been steadily increasing its dividend over the past decade, from a quarterly payout of 64 cents per share in April 2011 to $1.20 per share in its most recent dividend. Apparel company V.F. Corp had the the second-highest dividend yield on the list. The stock has struggled in 2021, falling 6%, and is now trading 18% below its consensus analyst price target, according to FactSet. Two popular consumer brands made the list in McDonald's and Coca-Cola . Their stocks sport dividend yields of 2.3% and 3.0%, respectively, and the fast-food chain also has buy ratings from 71% of the analysts that cover it, according to FactSet. Deutsche Bank upgraded McDonald's to buy from hold on March 16, saying in a note to clients that the risk-reward of buying the stock was "quite attractive."

A large portion of French fries, a classic Big Mac burger and a large sized coke are on display on a tray at a branch restaurant of fast food chain McDonald's in Muehlheim am Main, Germany, 22 April 2015.

picture alliance | picture alliance | Getty Images

With bond yields rising in recent months and the market's biggest stocks still sluggish after a strong 2020, investors may be looking for safe dividend plays to beef up their portfolios.

Yields move inversely to prices, meaning that existing bondholders are seeing the value of their holdings go down. The rise in yields has put pressure on long-duration, or growth, stocks this year, but tend not to be negative for equities on the whole.