We started the new decade on a very upbeat note, and then 2020 turned into a gruesome bad movie featuring the worst global health crisis in 100 years. While volatility has cooled down, the Chicago Board Options Exchange’s CBOE Volatility Index (VIX) has dropped to the low 30s from a stunning high in March of 85, but we are still seeing big swings in the markets.
A new massive Baird research report features the firm’s fresh ideas for stocks to buy for the balance of 2020. Given the big run off the March lows, we were intrigued by the “ideas for investors seeking safer dividends” section of the report. With many companies having cut or even eliminated paying dividends to shore up balance sheets and liquidity, this seemed like a very good group to examine.
The Baird report highlighted dividend-paying stocks in seven different sectors. We screened for top companies that have been hit hard but should bounce back nicely as the economy improves in the third and fourth quarters. All the stocks are rated Outperform at Baird. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.
ADM
This is a very solid play for rocky markets, offering a very reasonable entry point as shares are down 21% this year. Archer Daniels Midland Co. (NYSE: ADM) processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company operates through the following segments.
The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing and further processing of oilseeds, such as soybeans, and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed, into vegetable oils and protein meals.
The Carbohydrate Solutions segment engages in corn wet milling and dry milling activities. It also converts corn into sweeteners, starches and bioproducts. Lastly, the Nutrition segment provides customer needs for food, beverages, health and wellness, and more.
Investors receive a nice 4.15% dividend. Baird has a $41 price objective on the shares, and the Wall Street consensus figure is up at $46.75. Archer Daniels Midland stock traded at $34.20 early Wednesday.
Bank of America
This leading bank stock has been crushed, down a stunning 33% this year. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally. It operates some 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
The bank reported net income for the first quarter of 2020 of $4 billion, or $0.40 per diluted share. Revenue for the quarter came to $22.8 billion, down from $23.0 billion a year ago. With interest rates plunging, the net interest income banks typically earn has been crushed as well.
Investors receive a 3.29% dividend. The Baird price target is $27, in line with the consensus target of $27.15. Bank of America stock traded at $21.25 Wednesday morning.
24/7 Wall St.Raytheon Technologies
This company has a diversified mix of business and its share price is down a stunning 33% this year. Raytheon Technologies Corp. (NYSE: RTX) is an industry leader in defense, government electronics, space, information technology and technical services. The company operates in four principal business segments: Integrated Defense Systems, Intelligence, Information and Services, Missile Systems, and Space and Airborne Systems. It is among the companies that make the most from the U.S. government.
With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.
Last year, Raytheon and United Technologies agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies received unanimous approval from their respective boards and the merger is finally complete, with the new company now called Raytheon Technologies.
Raytheon Technologies stockholders receive a 3.35% dividend. The whopping $101 Baird price objective compares with the posted consensus target price of $75.72. Shares were trading at $55.10 apiece.
UPS
Needless to say, with many at home due to current lockdown rules, the delivery business has been red hot. United Parcel Service Inc. (NYSE: UPS) provides logistics, freight (air, sea, ground, rail) forwarding, international trade management and customs brokerage.
The company has roughly 481,000 employees (390,000 in the United States) and serves more than 220 countries and territories. It operates a fleet of 237 UPS aircraft, as well as a ground fleet of more than 110,000 delivery vehicles. More than 46% of its volume is business-to-consumer, and it delivers more than 18 million packages per day globally.
UPS said earlier this year that it aims to more than double weekend deliveries in 2020 as package carriers look for ways to satisfy the always-on demands of e-commerce customers, including rising rival Amazon.com. UPS is vying also to attract more retailers that want to keep pace with Amazon shipping speeds, while holding on to its Amazon business, which accounts for almost 20% of company volume.
Shareholders receive a very appetizing 4.35% dividend. Baird has set its price target at $116. The posted consensus target is lower at $103.22 and UPS was trading at $92.45 per share.
Verizon
This is a top telecommunications company offers tremendous value at current levels, and its shares are still down 8% for the year. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
The company’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition. Verizon acquired AOL and Yahoo to create the Oath digital content platform.
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. Furthermore, Verizon is one of the most valuable brands in the world.
Investors receive an outstanding 4.44% dividend. The Baird price objective is $58. The consensus price target is $61.32 and Verizon stock was changing hands at $55.85 Wednesday morning.
Five top stocks to buy that feature stable and dependable dividends, and are all still trading down for the year. These are all outstanding additions to total return portfolios that are basically more conservative in nature.
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