Investing

Merrill Lynch Has 5 Income Portfolio Stocks to Buy With Big-Time Dividends

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It has become pretty obvious that interest rates are going nowhere this year, and they may not go anywhere in 2020 either. The Federal Reserve is worried about slowing growth, and with inflation seemingly contained, the all-new dovish Fed Chair, Jay Powell, has slowed down not only rate hikes, but the balance sheet clean-up as well. Worried investors piled into Treasury bonds this week, driving some yields down to 52-week lows.

So what should investors do now? Look for safe stocks that pay large and dependable dividends, and that is exactly what makes up the Merrill Lynch Income Portfolio. Every sector is represented, and it is a good blueprint for total return accounts.

We screened the portfolio looking for high-yielding Buy-rated companies in each sector and found the following five from different sectors that are solid plays now. Not only are these great total return ideas, but we also looked for companies that have a better risk rating as recent trade issues had stirred up volatility.

AT&T

This is a telecom component on the prestigious Merrill Lynch US 1 list. 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.

This telecom giant also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions. Trading at a very cheap 9.4 times estimated 2019 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 a mixed bag for the first quarter results, and Merrill Lynch said this:

On a consolidated basis, 1Q revenue, EBITDA, and EPS were all pretty much in line with consensus estimates. Entertainment EBITDA was ahead of both us and the Street, as AT&T was able to bend the cost curve and drive up video average revenue per user. Due to definitional changes, AT&T’s implied capex guidance is $20 billion and not $22 billion where the Street consensus is today.

AT&T investors are paid a massive 6.53% dividend. The Merrill Lynch price target for the shares was last seen at $37, and the Wall Street consensus target is lower at $33.88. The shares were trading on Thursday’s close at $31.62.

Coca-Cola

This top Warren Buffet holding not only offers safety but an incredibly strong worldwide brand with 40% overseas sales. 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, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one 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 Coca-Cola beverages at a rate of more than 1.9 billion servings a day. With coolers getting packed for picnics, parades and vacations you can bet that they will be stuffed with products from this iconic American company. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola investors are paid an outstanding 3.26% dividend. Merrill Lynch has a price target of $55, while the posted consensus target was last seen at $50.33. The stock closed on Thursday at $49.58 a share.

Crown Castle International

This top tower company offers incredible growth and income possibilities. Crown Castle International Corp. (NYSE: CCI) is one of the largest U.S. wireless tower companies, with over 40,000 towers across the country. Its core business is leasing space on its wireless towers primarily to wireless carriers, government agencies and broadband data providers.

Crown Castle is one of the best stocks in the group for more conservative investors as the high-yield distribution and low volatility make it a good holding for accounts seeking growth and income with less risk.

Investors in Crown Castle are paid a very solid 3.54% distribution. The prior $119 Merrill Lynch price objective recently was lifted to $133. The consensus price target is just $119.86, and the stock traded most recently at $127.53.

Pfizer

This top pharmaceutical stock made a gigantic splash last year with a $5.5 billion purchase of Anacor Pharmaceuticals. Pfizer Inc. (NYSE: PFE) is a global biopharmaceutical company with a diversified portfolio of products and pipeline candidates, and it is one of the largest pharmaceutical companies in the world as measured by market capitalization and revenue. It also is a component of the Dow Jones industrial average.

The company’s commercial operations are bifurcated into two business segments: Innovative Health, which focuses on the development and commercialization of medicines and vaccines, as well as consumer health care products, in various therapeutic areas, and Essential Health, which offers branded generic products, biosimilars, anti-infectives and other products without marketing patent protection.

Pfizer investors are paid a very solid 3.5% dividend. Merrill Lynch has set its price objective at $49. That compares with the $44.14 consensus price objective, as well as the most recent share price of $41.64.

Toronto-Dominion Bank

This is a top yielding financial stock to add to portfolios. Toronto-Dominion Bank (NYSE: TD) is the largest Canadian bank and has over 1,100 branches across the country, with an above-average concentration in Ontario.

The bank’s domestic retail banking operations are the crown jewel and underpin its solid retail franchise, and the bank has below-average exposure to capital markets businesses. TD has been active on the acquisition front in recent years, and it operates through its TD Commerce Bank and TD Ameritrade in the United States.

TD Ameritrade business an incredibly fast-growing business that consistently challenges for online supremacy among the top Wall Street investment banks.

Toronto-Dominion Bank investors are paid a very solid 4.01% dividend. The Merrill Lynch price target is $62, and the posted consensus price objective is $64.12. The shares closed at $55.27 on Thursday.

These five top stocks are all rated Buy and come with outstanding and dependable dividends, and they have good growth prospects. With the market very pricey, not to mention volatile, these stocks make sense for investors looking to shift to lower beta profile stocks.

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