The S&P 500 has slumped to open 2022, and rising interest rates could further pressure stock valuations in coming months. Whether the market is up, down or sideways, dividends are one steady, reliable source of income for investors, but dividends are only as reliable as the companies that pay them.
A high dividend is meaningless if the stock's losses more than offset the yield. Ideally, investors should identify dividend stocks that also have significant valuation upside.
Here are seven dividend stocks to buy with at least 3% yields and Buy ratings from the Bank of America analyst team.
Simon Property Group (NYSE:SPG)
Simon Property Group is a real estate investment trust owns, develops and manages retail real estate, primarily regional malls, outlet centers, and community and lifestyle centers.
Analyst Jeffrey Spector says Simon's guidance is conservative considering the company has several tailwinds, including record leasing volume, low floating debt rate exposure relative to peers and storing retailer demand for physical stores. In addition, Simon recently announced a new $2 billion share buyback program. The stock pays a 6% dividend.
Bank of America has a Buy rating and $175 price target for SPG stock.
AT&T (NYSE:T)
Telecom giant AT&T recently announced it will raise prices on some of its legacy unlimited and mobile share data plans beginning June 1. Analyst David Barden says the price hike suggests AT&T is making two important bets.
First, he says AT&T is betting its network and other improvements are worth customers paying more. Second, AT&T is betting that Verizon Communications Inc. (NYSE:VZ) and T-Mobile Us Inc (NASDAQ:TMUS) won't respond to the price hike with an aggressive marketing push to lure aggrieved customers away. AT&T shares pay a 5.4% dividend.
Bank of America has a Buy rating and $25 price target for T stock.
Verizon Communications Inc. (NYSE:VZ)
Verizon is one of AT&T's two largest competitors and is another attractive dividend stock that Barden recommends. He says Verizon has an extremely defensible subscriber base and is more profitable than its largest competitors.
In addition, he says Verizon has a stronger balance sheet following asset divestitures and is well-positioned to generate earnings growth outpacing its rivals. Barden estimates 2022 free cash flow of more than $16 billion for Verizon and says normalized annual free cash flow in future years should be even higher. Verizon pays a 5.1% dividend.
Bank of America has a Buy rating and $64 price target for VZ stock.
See Also: Best Dividend Paying Stocks
IBM (NYSE:IBM)
IBM offers information technology products to the software, infrastructure, and services industries.
Analyst Wamsi Mohan says IBM's portfolio has been resilient in a slowing macro environment. After a recent call with IBM management, Mohan says tech spending should outpace GDP growth, and IBM should see elevated European demand until the conflict in Ukraine is resolved. In addition, Mohan says IBM's revenue growth should stabilize now that half of its revenue streams are recurring. IBM shares pay a 5.1% dividend.
Bank of America has a Buy rating and $165 price target for IBM stock.
Philip Morris International Inc. (NYSE:PM)
Philip Morris is one of the world's largest global tobacco producers. It's been a volatile year for Philip Morris so far in 2022 given the company had significant operations in Russia.
Analyst Lisa Lewandowski says the global cigarette market is facing secular volume pressures, but Philip Morris is making the necessary adjustments to its business by shifting productivity away from Russia and pivoting to other high-potential markets and shifting customers to higher-margin cigarette alternatives. The stock also has an attractive 4.9% dividend yield.
Bank of America has a Buy rating and $117 price target for PM stock.
Best Buy Co Inc (NYSE:BBY)
Best buy is one of the largest consumer electronics retailers.
Retailers have had a rough first quarter earnings season, and analyst Elizabeth Suzuki says Best Buy is facing a more modest growth outlook and discretionary spending risks in the near-term. Fortunately, with the stock down more than 50% from recent highs, Suzuki says Best Buy shares are fully pricing in its potential 2022 earnings growth deceleration. In addition, she says Best Buy remains a market leader in electronics, and the stock pays a sizable 4.8% dividend.
Bank of America has a Buy rating and $110 price target for BBY stock.
Williams Companies Inc (NYSE:WMB)
Williams is a domestic U.S. natural gas infrastructure company.
The energy sector is one of the few silver linings in a brutal market so far this year, and Williams shares are actually up 35.9% year-to-date as energy and natural gas prices have soared. Even after the big run, analyst Chase Mulvehill says there is more upside ahead for Williams. He says Williams' transmission business is an excellent growth opportunity, and the company is well-positioned to benefit from dry gas production growth in the Haynesville shale and Northeast region. Williams pays a 4.8% dividend.
Bank of America has a Buy rating and $41 price target for WMB stock.
