Tuesday’s nice rally notwithstanding, some market pros are getting nervous, and with good reason. Despite the inexorable move higher in the markets since the lows in February, there is a rash of headline events coming this summer that could make for a roller-coaster market. In addition, since we appear to be stuck in a trading range, we are back up near the top of the range, and it could roll over again.

In addition to what is already shaping up as a hotly contested race between Donald Trump and Hillary Clinton, the elections in Spain, the potential for the Brexit (the U.K. departure from the European Union), continued slowdowns in China and a host of other lesser issues could really muddy the waters.

With a flight to cash hardly workable for most investors, and Treasury bonds seemingly very rich, quality low-volatility dividend stocks make the most sense. We screened the Merrill Lynch data base for stocks rated Buy with the best volatility risk at the firm. Three look like outstanding choices, and all are on the Merrill Lynch US 1 list of top stock picks.

Coca-Cola Enterprises

This company reported solid earnings, and merger rumors are starting to fly as well. Coca-Cola Enterprises Inc. (NYSE: CCE) is the leading Western European marketer, producer and distributor of nonalcoholic ready-to-drink beverages and one of the world’s largest independent Coca-Cola bottlers. It is the sole licensed bottler for products of Coca-Cola in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden. The company operates with a local focus and has 17 manufacturing sites across Europe, where the company manufactures nearly 90% of its products in the markets in which they are consumed.

The company reported solid first-quarter earnings, though volumes dropped some. The Merrill Lynch team notes that the pending merger with Coca-Cola Erfrischungsgetränke in Germany and Coca-Cola Iberian Partners, which serves Spain and Portugal, will serve as the next big catalysts. The analysts say that the company has been working on the European registration statement.

Coca-Cola Enterprises investors receive a solid 2.22% dividend. The Merrill Lynch price target for the stock is $58, and the Thomson/First Call consensus target is $56.20. The shares closed on Tuesday at $54.12.

Comcast

This is a broadcasting related stock that could have big upside potential. Comcast Corp. (NYSE: CMCSA) is one of the nation’s largest video, high-speed internet and phone providers to residential customers under the XFINITY brand, and it also provides these services to businesses. Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings.

Comcast consistently has grown earnings substantially with extremely strong content revenue growth. Increased revenue at NBC Universal also is giving the company some earnings tailwinds, and a growing sports lineup is adding to revenues.

The Jefferies team sees cable giants like Comcast as a top growth story that still have plenty of room to run, as well as generating solid earnings to support continued stock buybacks.

Comcast investors receive a 1.76% dividend. The $84 Merrill Lynch price target is well above the consensus target of $70.81. Shares closed trading Tuesday at $62.64.

Eli Lilly

This top pharmaceutical should do just fine regardless of headline risk in the summer. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

Reported first-quarter earnings and revenue came in just slightly under consensus. While the overall numbers were unremarkable in the analysts view, the Merrill Lynch team is still very focused on the company’s outstanding late-stage product pipeline, which they view as very undervalued. Eli Lilly did however raise the company’s 2016 earnings per share and revenue guidance to above the consensus estimates.

Shareholders are paid a 2.65% dividend. Merrill Lynch has a $108 price target. The consensus target is $95.95. Shares closed Tuesday at $76.88.

Three Buy-rated stocks on the Merrill Lynch US 1 list with the firm’s best volatility risk rating. While there are no guarantees they won’t trade down in a big sell-off, they should act much better than high beat momentum stock.

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