Tuesday’s big sell-off notwithstanding, it is pretty clear that after a big run, we could be in for some volatility, especially this summer. The one thing that the markets almost always respond negatively to, and this is even more so than bad news, is uncertainty. And no matter how you slice it, we won’t know who will be president until after the election in November. It looks to be a Hillary Clinton versus Donald Trump match up, and the fireworks likely are just beginning.

It probably make sense now to move out of high volatility momentum type stocks into more conservative dividend-paying companies that will continue to crank out solid earnings regardless of who is president. We screened the Merrill Lynch research universe for companies that reported solid first-quarter numbers, pay a good dividend and are rated Buy. Four are good ideas now.

AT&T

This company had an outstanding first quarter from a stock price standpoint and could be poised to go higher. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T has been focusing on the IP VPN and Ethernet services. This outstanding business model, along with the decline of Verizon’s market share in the arena, has helped the company meaningfully grow its revenues from strategic business services. Apart from taking appropriate technical measures, the company has collaborated with big cloud service providers like Amazon Web Service and data center operators to provide Ethernet connections.

The company reported adjusted first-quarter earnings of $0.72 per share on revenue of $40.5 billion back in April. Its revenue rose 24% from the year-earlier period primarily due to the July 2015 acquisition of DirecTV for $49 billion in equity value. The company added 2.3 million wireless subscribers during the first quarter. About 328,000 of the additions were DirecTV net adds. The company’s Entertainment Group broadband grew with 186,000 IP broadband net adds.

AT&T investors receive a huge 4.9% dividend. The Merrill Lynch price target for the stock is $42, and the Thomson/First Call consensus estimate is $39.55. Shares closed Tuesday at $38.91.

General Electric

This iconic blue chip industrial has been on a strong roll, and the currency tailwinds may help to continue the winning ways. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance. The Merrill Lynch analysts feel that the American giant will be a large player in the efficient energy field.

The company is in the middle of a huge plan that is scaling back many of its operations and returning capital to shareholders. GE has signed deals to sell $166 billion worth of assets in its GE Capital segment. Of that total, $146 billion has closed. GE Capital paid a $7.5 billion dividend to the parent company in the first quarter and is on track to contribute $18 billion in the fiscal year.

The company posted solid first-quarter numbers that were somewhat hampered by slower organic growth. GE does an estimated 52.9% of its total sales overseas, so a weaker dollar surely could help the rest of this year and into 2017.

GE investors receive 3.0% dividend. The $33 Merrill Lynch price target is in line with the consensus price objective of at $33.17. Shares closed Tuesday at $30.63.
Lockheed Martin

Lockheed Martin Corp. (NYSE: LMT) is a top aerospace and defense stock to buy, as 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. The company 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.

The company reported first-quarter earnings per share (EPS) of $2.58 on $11.7 billion in revenue. That compares to consensus estimates from Thomson Reuters of $2.59 in EPS on revenue of $11.34 billion. In the same period of the previous year, it posted EPS of $2.74 and $10.11 billion in revenue. In terms of guidance, the outlook for the 2016 full year changed only slightly from the previous levels. The company now expects full-year EPS in the range of $11.50 to $11.80 and revenues in the range of $49.6 billion to $51.1 billion.

Lockheed Martin recently was awarded a $1.27 billion contract for the delivery of 13 F-35 Lightning II aircraft. Six F-35Bs will be going to the Marine Corps, three F-35As to the Air Force and four F-35Cs to the Navy.

Lockheed Martin investors receive a 2.8% dividend. Merrill Lynch has a $265 price target. The consensus target is $240.69, and the stock closed Tuesday at $234.70.

McDonald’s

The fast-food giant has been on fire over the past six months, but it still remains a solid pick for investors seeking dividends and a degree of safety. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.

Wall Street as a whole is very pleased with the efforts from new CEO Stephen Easterbrook. He is taken the bull by the horns with a strategic corporate reset by changing the menu, updating the hours breakfast is served and modernizing the restaurants. Management prioritized that dividend growth as a key element of its shareholder value proposition. McDonald’s has increased its dividend every year for the past 39 years.

The company reported outstanding first-quarter results in April, generating higher sales, revenues and operating income in constant currencies across all business segments. Hedge funds are very bullish on the company as a total of 20 own the stock.

McDonald’s investors receive a 2.77% dividend. The Merrill Lynch price target is $143, and consensus target is $132.14 The stock closed Tuesday at $128.40.

Stocks still remain the place to be, with yields hovering at multiyear lows. Moving to safer stocks from momentum makes sense with the potential volatility the political races and other headline issues could force into the markets this summer.

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