Any way you want to slice it, there is a good chance we remain in a very low-yield environment for years. That’s fine for younger investors, as risky assets like stocks provide long-term growth. It’s a little dicier for older investors that need yield. What we wanted to find was a combination of both: Solid growth ideas that also paid a dividend of at least 4%.

We screened the Merrill Lynch research data base for just those kinds of stocks. While the number is few, we did come across four companies that fit our criteria. They all are rated Buy at Merrill Lynch as well.

Crown Castle International

This is a top cell tower company that offers incredible growth and income possibilities. Crown Castle International Corp. (NYSE: CCI) provides wireless carriers with the infrastructure they need to keep people connected and businesses running. With approximately 40,000 towers and 15,000 small cell nodes supported by approximately 16,000 miles of fiber, Crown Castle is the nation’s largest provider of shared wireless infrastructure with a significant presence in the top 100 U.S. markets.

Numerous Wall Street analysts see the company as the cleanest play in U.S. Mobile infrastructure spending. They cite the company’s low-risk capital return strategy, upside optionality from the smaller cells and what they consider the company’s investment grade balance sheet. The company is structured as a real estate investment trust (REIT), so the dividends may contain return of principal.

Crown Castle shareholders are paid a very nice 4.16% dividend. The Merrill Lynch price target for the stock is $92, and the Thomson/First Call consensus target is set at $95.78. The shares closed most recently at $85.

General Motors

This company is in the automobile sector and its shares look to be very inexpensive at current levels. Despite all the recall troubles and litigation issues, hedge funds and mutual funds are continuing to stick with General Motors Co. (NYSE: GM), as many view the stock as very undervalued. GM trades just below an incredible 5.4 times estimated 2016 earnings. The company, like rival Ford, has benefited from incredible sales in China to boost revenue. GM invested heavily in China decades ago and grabbed a big chunk of what is now the world’s largest auto market.

The company reported very solid fourth-quarter earnings, and with gas prices staying at the lowest levels in years, and GM producing some of the best new models in years, the future for the battered stock looks very good.

GM investors are paid an outstanding 4.93% dividend. Merrill Lynch has a $44 price target for the stock. The consensus price target is much lower at $37.76. Shares closed Thursday at $30.82.
Occidental Petroleum

This is a top energy stock and one of the higher yielding domestic stocks in the energy sector. Occidental Petroleum Corp. (NYSE: OXY) is an international oil and gas exploration and production company with operations in the United States, the Middle East and Latin America. It is one of the largest U.S. oil and gas companies, based on equity market capitalization. The company’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. In addition, the wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.

For the fourth quarter, the company reported an adjusted net loss that was worse than the Wall Street analysts’ consensus estimate per share. But the Merrill Lynch team notes that the company continues to deliver capital expenditure cuts, and the expected total of $3 billion for this year is a mind-numbing cut of 50% versus 2015 expenditures.

With a rock solid balance sheet, and a commitment to dividend coverage, investors look safe for now. Occidental has paid quarterly cash dividends continuously since 1975 and has increased its dividend each year since 2002.

Occidental investors are paid a very rich, by current standards, 4.38% dividend. The Merrill Lynch price objective of $85 is well above the $73.27 consensus target. The stock closed Thursday at $68.44 per share.

Pfizer

This is a top pharmaceutical stock that was recently added to the Merrill Lynch US 1 list. Pfizer Inc. (NYSE: PFE) has a very strong pipeline, and being the world’s largest drug manufacturer by sales value supports the Wall Street notion that the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years.

The company announced recently the details in what would be one of this year’s biggest deals, a $160 billion merger with Allergan. But the Treasury Department has also announced that it is working on new rules for corporate tax inversions, which is potentially what the Pfizer/Allergan deal would be. That could possibly throw wrench into the negotiations. The Merrill Lynch analysts see 37% upside from current levels and 51% if the Allergan deal does indeed go through. Pfizer executives maintain that they don’t think government will scuttle the deal. With $3 to $5 arbitrage pressure on the stock, there is some downside protection, even if the deal does break.

Pfizer has announced that it is starting 20 clinical trials this year, and more soon after, on treatments to conquer cancer, as it also seeks to gain leadership in one of the hottest and most lucrative areas of medicine. Hedge funds seem to like the stock as a total of 22 own it now.

Pfizer investors are paid a rich 4.06% dividend. The $39 Merrill Lynch price target is pretty much in line with the consensus target posted at $39.13. Pfizer closed at $29.59 a share on Thursday.

Growth and a strong 4% or higher dividend makes all these stocks great candidates for growth and income portfolios. With limited downside, even if they trade sideways, investors are nicely paid to wait for a move higher.

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