All the top Wall Street firms that we follow here at 24/7 Wall St. keep a list for their institutional and retail clients of high-conviction stock picks. These are generally the companies they not only like on a longer term basis but stocks that usually have big upside to the assigned target price. With the fourth quarter all but over, many analysts have tweaked their lists of top stocks to buy to account for continued changes for the closing weeks of this year and into 2022.
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We screened UBS U.S. Equity Sector Strategists Top Picks list looking for the companies that pay solid dividends and also are strong plays in a very inflationary world. All six stocks we found make good sense for growth stock investors looking to add a dividend kicker to increase total return potential. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.
American Electric Power
This industry-leading utility is also a solid dividend-paying company. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.4 million customers in 11 states.
The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
Many on Wall Street feel that the stock trades at a discount to its utility peers, and they feel it deserves a premium. Top analysts also think the company may sell generating assets and buy back shares with the proceeds, which also will be accretive.
American Electric Power stock investors receive a 3.74% dividend. The UBS analysts have a $101 price target, while the consensus target is $96.10. Shares closed on Tuesday at $96.10.
Coca-Cola
This remains a top Warren Buffet holding and offers not only safety but also 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 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.
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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. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Investors receive a 3.06% dividend. The UBS price target for Coca-Cola stock is $62, pretty much in line with the $62.26 consensus target. The stock ended Tuesday trading at $55.21 per share.
ConocoPhillips
This large-cap energy company offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.
Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a sizable position in the Permian.
Investors receive a 2.53% dividend. The $117 UBS price target is well above the consensus target of $89.83. ConocoPhillips stock closed at $74.57 on Tuesday.
Eastman Chemical
This stock has rallied smartly off the March lows and is another safe haven for conservative investors. Eastman Chemical Co. (NYSE: EMN) engages in the provision of specialty chemicals. It operates through the following segments.
The Additives and Functional Products segment includes chemicals for products in the transportation, consumables, building and construction, animal nutrition, crop protection, energy, personal and home care, and other markets. The Fiber segment offers cellulose acetate tow for use in filtration media, primarily cigarette filters.
The Advanced Materials segment of Eastman Chemical produces and markets its polymers, films and plastics with differentiated performance properties for value-added end uses in transportation, consumables, building and construction, durable goods, and health and wellness markets.
The Chemical Intermediates segment consists of large-scale and vertical integration from the cellulose and acetyl, olefins and alkylamines streams to support operating segments with advantaged cost positions.
Investors receive a 2.78% dividend. UBS has set its price objective at $138. The consensus target for Eastman Chemical stock is $131.38, and the shares were last seen on Tuesday at $113.57.
Emerson Electric
This stock has backed up nicely and offers a solid entry point for investors. Emerson Electric Co. (NYSE: EMR) is a global technology and engineering company providing innovative solutions for customers in industrial, commercial and residential markets.
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The company’s Automation Solutions business helps process, hybrid and discrete manufacturers maximize production, protect personnel and the environment while optimizing their energy and operating costs. The Commercial & Residential Solutions business helps ensure human comfort and health, protect food quality and safety, advance energy efficiency and create a sustainable infrastructure.
Emerson Electric comes with a 2.27% dividend. The UBS price target is $116. The consensus figure is $109.77, and the closing share price on Tuesday was $92.23.
MPLX
This is the top holding for the Alerian MLP energy exchange-traded fund. MPLX L.P. (NYSE: MPLX) is primarily engaged in crude oil and refined products transportation and terminaling in the U.S. Midwest and Gulf Coast regions, as well as natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. MPLX was formed by independent U.S. refiner Marathon Petroleum.
MPLX is one of the bigger pipeline entities, with a market capitalization of nearly $30 billion, and the company repurchased a strong $155 million in units during the second quarter. The partnership currently has approximately $657 million remaining under its board authorization and that kind of buying by management tends to keep a bid under the stock price.
Investors receive an outstanding 9.62% distribution. UBS’s $37 price target for MPLX stock compares with the $34.59 consensus and Tuesday’s closing print of $29.86.
After huge gains across all the major indexes this year, many expect 2022 to be a far different story, with the potential for continued inflation, rising interest rates and a host of additional issues, not the least of which is the ongoing COVID-19 concerns. With some strategists seeing tepid, single-digit gains in store for 2022, it makes sense to lean more toward conservative ideas that pay dependable dividends, as total return could be the name of the game next year.
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