Investing
4 Dividend Aristocrat Stocks to Buy Now and Hold Forever
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The last time all three of the major U.S. stock indexes hit record highs at the same time was December 31, 1999, and like today there were concerns, like the Y2K scare, that despite looming couldn’t stop the indexes’ onslaught. Today, even though the political scene appears fractured, and worldwide terror seems to be on the rise, the markets hit all-time highs. The question for investors is what to do now. The answer is buy some of the top dividend stocks, put them in your account and hold them forever.
We screened the Merrill Lynch research universe for stock on the dividend aristocrats lists that were also rated Buy. The dividend aristocrats are members of the S&P 500 and have increased their dividends for at least 20 consecutive years. We found four that investors can buy now and hold forever.
AT&T
This company has had an incredible run this year, and the Merrill Lynch team sees it going even 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 14.3 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.
The company reported inline numbers for the second quarter, and while the consolidated revenue number was slightly higher than the Merrill Lynch estimate, the EBITDA was slightly below. Company management noted it is on track to meet or exceed current estimates for the year.
Many Wall Street analysts have cited the company’s positive commentary on free cash flow, in addition to improving video/broadband trends later this year, with single truck-roll and new converged offerings expected to be coming in October.
AT&T investors are paid a huge 4.42% dividend. The Merrill Lynch price target for the stock is $46, and the Wall Street consensus target is $42.84. The stock closed Thursday at $43.39 per share.
Coca-Cola
This company remains a top Warren Buffet holding and offers not only safety, but an incredible strong worldwide brand. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, its portfolio features 20 billion-dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade and Minute Maid. Globally, it is the top provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy its beverages at a rate of more than 1.9 billion servings a day.
Despite reporting second-quarter earnings that came in above some estimates, slower growth and flat volumes brought out the sellers and they tagged the stock big time. It is important to remember though that the company own 31.5% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors receive an outstanding 3.2% dividend. The Merrill Lynch price target is set at $52, while the consensus price target figure is $47.76. The stock closed Thursday at $43.75.
3M
This top industrial could really jump with an economic pickup. 3M Co. (NYSE: MMM) is a diversified, global manufacturer. Its businesses are technology-driven and organized under five segments: Consumer, Safety and Graphics, Electronics and Energy, Healthcare, and Industrial. Its popular brands include Scotch, Post-It, 3M and Thinsulate. The company also holds over 500 U.S. patents.
3M posted outstanding second-quarter results, and the company adjusted the midpoint of its guidance, the analysts remain positive but note the company, like many, faces a tough global macro environment. They do think the results are strong in relation to peers and feel that the focus toward return on invested capital will yield multiple expansion and earnings growth.
3M investors are paid a decent 2.45% dividend. Merrill Lynch has a $200 price target for the stock, and the Wall Street consensus price objective is $179.43. Shares closed most recently at $181.
Procter & Gamble
This stock is trading at almost the same level it was this time last year, in part because it has a very large 65% of sales directed to foreign customers, which should improve as the dollar’s run has slowed dramatically. Procter & Gamble Co. (NYSE: PG) is a solid consumer staples stock for conservative investors to consider.
The company sells lots of very well-known household items that are essential for everyday life, and it operates through five segments: Beauty, Hair and Personal Care; Grooming; Health Care; Fabric Care and Home Care; and Baby, Feminine and Family Care.
The company posted solid earnings last quarter, and many on Wall Street feel that the new focus on a slimmed down product portfolio will help spur earnings growth and return the company to its long-time premium consumer staples multiple. Some analyst estimates for the next two years are 2% above current Wall Street expectations.
Shareholders are paid a solid 3.1% dividend. Merrill Lynch has a $95 price target, and the posted consensus estimate is a touch lower at $90.56. The stock closed Thursday at $86.73 a share.
Nothing real exciting here, just companies that have been around forever, and regardless of politics, macro changes and headlines, they will be around for the foreseeable future. These stocks are perfect fits for conservative growth and income portfolios.
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