Investing

4 Dividend Stocks That Likely Could Survive a Market Crash

Lee Jackson

Published: September 27, 2016 8:25 am

Last Updated: January 13, 2020 3:06 am

September will be over this week, but the other month that can sometimes prove dangerous is on deck. October has been notorious when it comes to big sell-offs, and while a huge crash doesn’t seem likely, the bottom line is some black swan event like 9/11 is always in the cards. The question for investors getting nervous about the market, the election and the general state of the global macro picture is what stocks will hold up best if we do get hit hard.

We screened the Merrill Lynch research universe looking for stocks that were rated Buy, had a decent dividends, and also had the safest volatility risk rating at the firm We found four companies that makes sense for investors getting a touch nervous about the overall market.

AT&T

This stock has had an incredible run this year but is off over 10% in less than a month. 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.

AT&T is in the Merrill Lynch US 1 portfolio and has several major catalysts that likely will drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-verse subscribers and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address ongoing traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.

Other top Wall Street analysts have cited the company’s positive commentary on free cash flow, and improving video/broadband trends later this year with single truck-roll and new converged offerings are expected to be coming next month.

AT&T investors receive a huge 4.67% dividend. The Merrill Lynch price target for the stock is $46, and the Wall Street consensus price objective is $42.83. Shares closed Monday at $41.14.

Colgate-Palmolive

This top dividend payer is also a very safe play for investors. Colgate-Palmolive Co. (NYSE: CL) is the stock to buy in consumer staples. The company continues to deliver solid execution and is one of the best-positioned companies in the consumer staples sector, given its strong brands in attractive categories, particularly oral care.

More than half (52%) of total revenues at Colgate are derived in faster-growth emerging economies, and the company maintains leading or near-leading market shares across the Brazil, Russia, India, China (BRIC) regions. While those have slowed over the past year, a pickup in growth could be coming.

Back in the spring, Colgate increased the quarterly common stock cash dividend by 3%. The company has declared a new quarterly dividend of $0.39 per share on its common stock and will go ex-dividend next month on October 20.

Colgate-Palmolive investors are now paid a 2.13% dividend. The Merrill Lynch price target is $80, and the consensus target is $76.56. Shares closed Monday at $73.11.

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 Coke stock big time. It is important to remember though that the company owns 31.5% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola investors receive a 3.33% dividend. Merrill Lynch has a $50 price target, while the consensus target is set at $47.44. The stock closed Monday at $42.05.

NextEra Energy

With a very strong balance sheet, and this company looks poised for a solid fourth quarter of 2016 and into 2017. NextEra Energy Inc. (NYSE: NEE) is a leading clean energy company with consolidated revenues of over $17.0 billion and approximately 44,900 megawatts of generating capacity, which includes megawatts associated with noncontrolling interests related to NextEra Energy Partners.

Headquartered in Juno Beach, Florida, NextEra Energy’s principal subsidiaries are Florida Power & Light Company, which serves approximately 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources, which, together with its affiliated entities, is the world’s largest generator of renewable energy from the wind and sun.

Top analysts feel the company may very well be one of the top total return plays out of the large cap regulated space in the sector. One of the key drivers of NextEra’s growth has been the renewable energy development program, which continues to expand as the company adds new projects to its backlog. Those projects are expected to help grow 6% to 8% compound annual growth in adjusted earnings per share through 2018. Most on Wall Street feel that the steady earnings growth should also provide consistent dividend growth over that same time frame.

Shareholders are paid a 2.76% dividend. The $149 Merrill Lynch price target compares with the consensus target of $133.94. The stock closed Monday at $126.23.

While none of these companies are super-exciting, they are conservative and supply needs that are almost constant regardless of the economy or the stock market. All these stocks are suitable for more conservative accounts.