Needless to say, the stock market can be a very cruel mistress. Companies can report great numbers, but if the guidance is light? Look out! So what are patient long-term investors to do? The bottom line is stay with strong companies paying big dividends. If you do have to wait for fundamentals to resurface and come around, at least you have the comfort of consistent dividends coming in to help weather any temporary storm.

We screened the Merrill Lynch research data base for stocks yielding at least 4% that are currently out of favor and are rated Buy at the firm. We found four that make good sense for investors now and in the future.

Enterprise Products Partners

This is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers. Enterprise Products Partners L.P. (NYSE: EPD) once again, despite the energy slump, recently raised the distribution 1%. The company maintains a very good long-term position in the market. It provides many of its services on the basis of long-term, fixed-fee contracts, insulating against some of the wilder swings of the commodities that it trades in.

One reason why many analysts may have a liking for the stock might be its distribution coverage ratio. The company’s distribution coverage ratio is well above 1x, making it relatively less risky among the master limited partnerships (MLPs). The company’s distributions have grown for several quarters and are expected to continue in 2016. Plus the Standard & Poor’s current rating is BBB+, which is investment grade and the outlook is stable.

Enterprise Products investors receive a 6.54% distribution. The Merrill Lynch price target for the stock is $35. The Thomson/First Call consensus target is $32.88. Shares closed Thursday at $23.84.

Pfizer

This stock could be offering investors the best value at current trading levels. Pfizer Inc. (NYSE: PFE) rocked Wall Street last year by announcing a gigantic $15.2 billion purchase of Hospira, a top provider of sterile injectable drugs — including those used for acute care and cancer treatment — infusion technologies and biosimilars, which are subsequent versions of drugs whose patents have expired.

With a strong pipeline and the fact that Pfizer is the world’s largest drug manufacturer by sales volume, many analysts feel the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years, with Ibrance leading the way. Some on Wall Street also predict that the company will make an accretive acquisition between now and the end of 2016.

Sales of Ibrance totaled more than $250 million in the firm’s most recent quarterly earnings report. The pill, which essentially doubled the survival rate for certain advanced breast cancer patients, is already being widely prescribed.

Pfizer investors receive a 4% dividend. Merrill Lynch has a $39 price target. The consensus target is $40.19, and the stock closed Thursday at $30.20.
Qualcomm

This top technology stock has totally underperformed this year but is a member of the Merrill Lynch US 1 list. Qualcomm Inc. (NASDAQ: QCOM) is still a Wall Street favorite, and many are sticking to their guns, basically saying that trading at current levels, at 12.6 times estimated 2016 earnings, it may be a tremendous long-term value. Qualcomm has recurring royalty revenue and a strong footprint, so patient investors may fare very well.

The growth of 3G mobile technologies in emerging markets, like China and India, has had a positive impact on Qualcomm and could be a difference-maker going forward. Qualcomm is and has been for years a market leader in the development of 3G CDMA (Code Division Multiple Access) technologies. It recently developed an LTE chipset that supports SCDMA (Synchronous Code Division Multiple Access) technology. China’s mobile network runs on this, and it could provide the company with a huge leg up in years to come. The company signed numerous big licensing deals recently in China that gave the stock a solid boost.

The company recently announced a joint venture with Japan’s TDK company that will enable delivery of RFFE (radio frequency front-end) modules and RF (radio frequency) filters to fully integrate systems for mobile devices and other fast-growing business segments. According to Qualcomm, the RFFE space is projected to be an $18 billion market by 2020.

The company posted solid fourth quarter results, but a licensing dispute with Japanese technology giant LG has surfaced, and the analysts feel the dispute could last through fiscal 2016. They do remain positive on the stock though.

Investors receive a 4.4% dividend. The $75 Merrill Lynch price target is higher than the consensus estimate of $61.83. Shares closed Thursday at $43.59.

Verizon Communications

This top telecommunications company recently did away with some phone incentives, and its stock 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 self-described 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 reported solid fourth-quarter numbers with earnings slightly higher than the Merrill Lynch estimates and revenues right in line, but above the street consensus.

Verizon investors receive a massive 4.61% dividend. While the Merrill Lynch price target is $55, and the consensus price objective is $50.71. Shares closed Thursday at $49.01.

For worried growth and income investors, all these top stocks makes good sense for more aggressive growth and income portfolios. The total return potential is solid, and the downside risk is far less than momentum stocks. Plus, add in the out-of-favor status, and the upside could be stellar for patient investors.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.