Needless to say, the events of past two months reminded everybody that the threat of terrorism is global, and every time a horrific incident takes place, it puts stress on equity markets here and around the world. While investors cannot constantly shuffle the holdings in their portfolios based on every event, they can shift to companies that pay solid dividends and those less vulnerable to volatility selling.
We screened the Merrill Lynch research universe for stocks that are not only top dividend payers, but those that do most or all of their business here in the United States. We found four top companies that are rated Buy at Merrill Lynch.
Lockheed Martin
Lockheed Martin is a top aerospace and defense stock to buy, and many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. Employing 112,000, Lockheed Martin engages in the research, design, development, manufacture, integration and sustainment of technology systems, products and services. It also provides management, engineering, technical, scientific, logistics and information services. Its Aeronautics segment offers combat and air mobility aircraft, unmanned air vehicles and related technologies.
Lockheed completed its $9 billion acquisition of Sikorsky recently, and analysts around Wall Street have generally applauded the deal as the company become the world’s largest maker of military helicopters. It also became the maker of the world’s most sophisticated autonomous helicopters, with no clear competition in sight. Both Lockheed and Sikorsky are already transforming airborne logistics for the U.S. military, and they could soon transform airborne logistics for industry as well. This continues a tradition at Lockheed of making bolt-on acquisitions that strengthen the company’s overall product portfolio.
Lockheed Martin investors receive a very solid 3.05% dividend. The Merrill Lynch price target for the stock is $250, and the Thomson/First Call consensus target is $227.38. The stock closed most recently at $216.58.
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UnitedHealth
This is a top stock to buy in the rapidly consolidating managed health sector. UnitedHealth Group Inc. (NYSE: UNH) offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and it contracts directly with more than 850,000 physicians and care professionals and 6,000 hospitals and other care facilities. The company offers a broad spectrum of products and services through two distinct platforms: UnitedHealthcare, which provides health care coverage and benefits services, and Optum, which provides information and technology-enabled health services.
The company has posted outstanding earnings over the past year, and it is one of the companies that limited exposure to the public exchanges. It has in fact threatened to leave the exchanges, and is cutting or eliminating commissions to brokers that sell the exchange in many markets due to losses incurred. Trading at 3.3 times book value, and offering investors a good entry point, the stock makes great sense now.
UnitedHealth investors receive a 1.73% dividend. The Merrill Lynch price target is $145, and the consensus objective is $142.45. The stock closed Monday at $115.85.
Verizon Communications
This top telecommunications company recently did away with some phone incentives and also resides on the Merrill Lynch US 1 list. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network and delivers integrated business solutions to customers worldwide.
Wall Street has applauded Frontier’s acquisition of Verizon’s wireline operations in California, Florida and Texas, which is expected to be completed at the end of March 2016. Many feel that focusing on the higher margin segments at the company makes sense, and the sale to Frontier is a huge cash boost to the balance sheet.
Verizon investors receive a massive 4.92% dividend. The Merrill Lynch price target is $55, and the consensus target is $50.27. Shares closed Monday at $45.45.
Wells Fargo
This is another stock for investors to look at now for safety and dividends. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. It provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking, and it has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.
Wells Fargo has slowly, but surely become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line. The analysts feel that could aid a big return in capital to shareholders. The stock also remains a top Warren Buffett holding.
Merrill Lynch likes the stability, yield and some asset sensitivity that the bank offers, and investors looking to add financials to their portfolio could do well buying shares, also knowing that the bank has little exposure outside of the United States.
Wells Fargo shareholders receive a solid 2.82% dividend. Merrill Lynch has a $58 price target, and the consensus target is $58.55. Shares closed Monday at $53.20.
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While no stocks totally escape headline and market volatility, especially when terrorism is involved, these are all based in the United States and do the majority or all of their business there. So they should be less prone to selling should another Paris or San Bernardino type event happen.
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