This is probably territory most investors are very uncomfortable with. The fears of a massive global trade war just have not been part of the investing lexicon in years, and while there is a good chance it gets resolved, there is also the chance it stays in the news. Add in rising rates and some lousy third-quarter earnings, and the pot is being stirred.
So what are confused investors to do now? The Federal Reserve just raised the federal funds rate for the third time this year, and it now looks like there will be one more increase to come. Despite that knowledge, worried investors seeking safety bid the Treasury market up last week, with the 10-year bond yield just above the 3.05% level.
What makes sense now is to buy safe stocks that pay dividends and provide products or services that will continue to be bought or used regardless of what the overall equity market does. We screened the Merrill Lynch research universe and found five stocks rated Buy that fit the bill perfectly.
Altria
Shares of this maker of tobacco products and wine have been hit hard and offer value investors a great entry point. Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy, and the company’s Marlboro brand remains one of the most recognizable in the world.
Cash flow generation and the return of cash to Altria shareholders remain key facets of the company’s total shareholder return plan. The analysts expect continued support of the strong dividend, in addition to continued share repurchase activity. The board also raised the dividend by 8.2% in 2017.
To diversify away from cigarettes and cigars, Altria has expanded its portfolio into new categories like wine and e-cigarettes, and the company also has a 10% stake in Anheuser-Busch InBev.
Altria investors receive a 5.07% dividend. The Merrill Lynch price target for the stock is $72, and the Wall Street consensus estimate is $67.35 The stock traded Friday at $62.60.
[nativounit]
Marathon Petroleum
With a big deal in place, this company is now the biggest independent fuel maker in the United States. Marathon Petroleum Corp. (NYSE: MPC) recently completed the massive purchase of Andeavor, another refining giant, for $23.3 billion in the biggest-ever deal for an oil refiner.
Marathon now has the largest refining capacity in the United States, and most on Wall Street believe that management can achieve the $1 billion in synergies it has suggested.
Shareholders receive a 2.7% dividend. Merrill Lynch has a $95 price target, but the consensus target is $106.13. The shares traded Friday at $69.60.
McDonald’s
The fast-food giant does a ton of business overseas but 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 food-service retailer with over 37,000 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 men and women.
[recirclink id=500662]
McDonald’s posted solid third-quarter results that beat estimates, with global comparisons up a strong 4.2%. The only blemishes were U.S. company and franchise margins, which the company attributed to depreciation and amortization expense and labor productivity pressures.
Shareholders receive a 2.67% dividend. The $200 Merrill Lynch price target compares with a $190.96 consensus target. The shares traded Friday at $173.50.
Merck
This remains a leading health care stock pick for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.
The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products. The company reported solid third-quarter result, with Keytruda and Gardasil sales driving growth and leading the way.
Shareholders receive a 3.23% dividend. Merrill Lynch has set its price target at $79. The consensus target is $77.93, and shares traded at $69.80 on Friday.
[recirclink id=500913]
Verizon Communications
This top telecommunications company offers tremendous value. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.
The company reported better-than-expected third-quarter results as the wireless carrier’s fundamentals came in ahead of expectations. Postpaid phone net additions of more than 295,000 were the highlight in the quarter.
Investors receive a 4.32% dividend. The Merrill Lynch price target is $58. The consensus target is $57.79, and the stock traded Friday at $56.10.
[wallst_email_signup]
These five companies all provide goods or services that will still be in big demand regardless of what the stock market does. They all provide safety, solid growth potential and, best of all, reliable dividends, which can soften the blow if the market does take a big dive.
Top Gaining Stocks
Top Losing Stocks