- Higher-than-expected inflation has prompted many Wall Street strategists to recalculate.
- Brian Belski, the top strategist at BMO Capital Markets, has just lowered his price target for the S&P 500.
- Here are 42 stocks to consider for strong dividend growth as prices continue to rise.
The biggest surprise in the markets this year is how persistent inflation has been. Central banks like the Federal Reserve were definitely underfoot, as were Wall Street strategists — especially bullish like Brian Belski, the chief investment strategist at BMO Capital Markets.
For most of this year, Belski had the highest price target for the S&P 500 on the street. But Belski no longer holds the title of biggest bull after hitting his target for the second time this year on Thursday. The revision came after the September inflation report came in higher than expected.
“What has changed? The simple answer is the inflation environment, which we underestimated with our previous forecast,” Belski wrote in an Oct. 13 note announcing the new price target.
While Belski expects inflation reports to remain hot, he is still optimistic. Its revised S&P 500 target means the index will rise a “more realistic” 19% in the fourth quarter to end the year at 4,300. That would represent a 10% loss after the index fell nearly 27%.
“While we have dampened our enthusiasm, we truly believe that equities can and should recover from current levels,” Belski wrote. “The only caveat is that the future trajectory is likely to follow more normalized patterns, a sharp departure from the pandemic-driven gains of 2020-21 and the resulting YTD losses that have settled much of that excess.”
Focus on 42 stocks with solid dividend growth while inflation is rampant
Belski and his colleagues at BMO Capital Markets have nine investment strategy portfolios that can serve as models for investors. One such portfolio is the U.S. dividend growth portfolio, which fell 5.5% in the third quarter, trailing the S&P 500 by 0.65% over the period, but still outperforming the index by 6%, the company says. The portfolio yields 3.4%.
Below are the 42 stocks currently in the U.S. dividend growth portfolio, along with the ticker, sector, dividend yield on October 10, and BMO analysts’ rating for each.