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Nightmare Election Almost Over: 5 Dividend Stocks to Buy Now That Can't Wait
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It’s been almost 600 days since the election cycle for the 2016 presidential race started. Investors, and almost everybody else, are just ready for it to be over. With the race in many battleground states too close to call, one thing is for sure. There will be a winner, and the uncertainty that some companies pointed to during third-quarter results presentations also soon will be over.
Some top Wall Street strategists feel that financial and consumer discretionary companies could benefit from the conclusion of the election, as far more of them noted the uncertainty during conference calls than other sectors. We screened the Merrill Lynch research data base for companies in the two sectors that look solid and are rated Buy. We found five that investors may want to add to portfolios now, all of which pay outstanding dividends.
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.
The company reported solid third-quarter results that beat the Merrill Lynch estimates. The firm also noted that with margin expansion growing and headwinds from currency starting to abate, things are looking up for the beverage giant. And remember that the company owns 31.5% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors receive a 3.3% dividend. The Merrill Lynch price target for the stock is $50. The Wall Street consensus target is $46.89. The stock closed Friday at $42.23.
Invesco
This financial services leader has strong positions in both equity exchange traded funds (ETFs) and actively managed equity and debt mutual funds. Invesco Ltd. (NYSE: IVZ) looks to be very well-positioned to capitalize on inflows into both segments, as well as higher asset prices, as many on Wall Street see a continuation of the seven-year bull market.
Invesco PowerShares is the boutique investment management firm that manages a family of exchange traded funds (ETFs). The company has been part of Invesco, which markets the PowerShares product, since 2006. The incredible growth and popularity of the product is why many on Wall Street remain so bullish on the stock.
The analysts see the company as one that is best positioned to compete for share, given mix, product offerings and attractive relative performance.
Invesco investors receive a 3.92% dividend. Merrill Lynch has a $36 price target, and the consensus target is $34.23 Shares closed Friday at $28.54.
JPMorgan
This stock trades at a very low 10.8 times estimated 2017 forward earnings and could respond well in a rising rate scenario. JPMorgan Chase & Co. (NYSE: JPM) is expected to continue to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings and a very solid price-to-book value. Some on Wall Street have cautioned that last year’s divestiture of the physical commodities business could provide earnings headwind throughout this year.
The company reported outstanding third-quarter results, and Merrill Lynch thinks the results are sustainable going forward. The firm raised its estimates for 2017 and feels JPMorgan can earn as much as $7 a share by 2018. Despite being a crowded trade, Merrill Lynch also feels that the bank’s superior earnings growth should continue the stock’s outperformance.
Improvement in loan growth, terrific equity capital markets and a steady increase in deposits will be a solid plus. Trading at a discount to many of the large cap banks on 2016 earnings estimates helps upside potential as well. With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors.
Earlier this year, Dimon put his money where his mouth was and reportedly bought a stunning 500,000 shares of JPMorgan stock for a massive $26 million. That brought his total holdings in the bank to 6.7 million shares, worth over $360 million.
Investors receive a 2.78% dividend. The $74 Merrill Lynch price target compares with the consensus target of $72.24. Shares closed Friday at $69.11.
McDonald’s
The fast-food giant has been on a roller-coaster this year, but it 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.
The company reported very solid third-quarter results after a so-so second quarter. Merrill Lynch noted this in a recent research report:
McDonald’s reported better than expected this operating results with global same store sales up 3.5%, including the U.S. up 1.3%. We maintain our 2016 GAAP earnings-per share estimate but are raising our 2017 estimate by $0.10. McDonald’s is executing restructuring plans.
McDonald’s shareholders receive a 3.35% dividend. Merrill Lynch has a whopping $140 price target. The consensus price objective is $127.32. Shares closed Friday at $112.10.
PNC Financial Services
This top regional bank recently was added to the Merrill Lynch US 1 list and offers investors a solid entry point. The PNC Financial Services Group Inc. (NYSE: PNC) is one of the country’s largest diversified financial services organizations. It provides retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; and wealth management and asset management. With consistent earnings growth and a very positive and growing loan portfolio, the company is a premiere super-regional bank stock to own.
Wall Street analysts point to numerous positives, including the bank implementing huge cost savings plans. The bank is working on up to $100 million of new savings announced last year, and it is also applauded for outstanding credit/risk management and the limited exposure to the capital markets related areas, while focusing on traditional banking.
Merrill Lynch feels the underperformance this year makes the stock very attractive, and it notes the savings initiative and the move to digitization as positives to what is very solid banking story.
PNC shareholders receive a 2.31% dividend. The Merrill Lynch price target is set at $100. The consensus target is $96.80. Shares closed Friday at $95.10.
The stock market dislikes one thing more than almost anything else, and that is uncertainty. The resolution of the election, regardless of who wins, will at the minimum take away that uncertainty. All five of these blue chip leaders make good sense for growth and income portfolios.
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