24/7 Insights

• AI stocks are facing headwinds and sky high valuations are cooling down
• J.P. Morgan’s top picks are in May are stable, established brands
• 2 legendary, high-yield dividend stocks Wall Street loves (free access)

The artificial intelligence rally over the past year and a half, led by the so-called Magnificent Seven, has been remarkable if you owned those stocks. However, most of the S&P 500 is treading water and will not likely catch up to the hype-driven AI stocks soon.

While the AI sector has been a beacon of success, it’s important to note that storm clouds are gathering on the horizon. The risk of an escalating conflict in the Middle East and other factors have led many Wall Street strategists to adopt a cautious stance, predicting modest single-digit gains for the remainder of 2024. However, it’s crucial to be prepared for a significant 20% or more sell-off, which could also be possible.

Our May J.P. Morgan Analyst U.S. Core List screening has unearthed five top companies (two of which Warren Buffett has huge positions in) with solid total return potential and dependable dividends, presenting a promising opportunity for those seeking passive income. These stocks are among the world’s most prestigious investment banks’ top picks and are likely to attract the attention of savvy investors.

Why we recommend J.P. Morgan stocks

JP Morgan Chase & Co. (NYSE: JPM) is one of the acknowledged leaders in the investment landscape on Wall Street and worldwide. The firm’s top-notch research department continues to provide clients with the best ideas across the investing spectrum and is likely to continue to do so for years to come. All of the stocks mentioned are rated Overweight at JP Morgan 

Abbott Laboratories

This top pharmaceutical and med-tech stock has excellent growth potential and a 2.05% dividend. Abbott Laboratories (NYSE: ABT) discovers, develops, manufactures, and sells healthcare products worldwide.

It operates in four segments:

• Established Pharmaceutical Products
• Diagnostic Products
• Nutritional Products
• Medical Devices

The company provides generic pharmaceuticals for the treatment of:

• Pancreatic exocrine insufficiency
• Irritable bowel syndrome or biliary spasm
• Intrahepatic cholestasis or depressive symptoms
• Gynecological disorder
• Hormone replacement therapy
• Dyslipidemia
• Hypertension
• Hypothyroidism
• Ménière’s disease
• Vestibular vertigo, pain, fever, inflammation, and migraine, as well as provides anti-infective clarithromycin, influenza vaccine, and products to regulate physiological rhythm of the colon

It also offers laboratory and transfusion medicine systems in the areas of:

• Immunoassay
• Clinical chemistry
• Hematology, and transfusion
• Molecular diagnostics polymerase chain reaction instrument systems that automate the extraction, purification, and preparation of DNA and RNA from patient samples, and detect and measure infectious agents; point of care systems
• Cartridges for testing blood gas, chemistry, electrolytes, coagulation, and immunoassay
• Rapid diagnostics lateral flow testing products
• Molecular point-of-care testing for HIV, SARS-CoV-2, influenza A and B, RSV, and strep A
• Cardiometabolic test systems
• Drug and alcohol test
• Remote patient monitoring and consumer self-test systems; and informatics and automation solutions for laboratories

In addition, the company provides pediatric and adult nutritional products; rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases; diabetes care products, such as glucose and blood glucose monitoring systems; and neuromodulation devices for the management of chronic pain and movement disorders

Bank of America

The company posted strong first-quarter results that exceeded analyst estimates and pays a solid 2.81% dividend. 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
• operating 5,100 banking centers, 16,300 ATMs, call centers, and online and mobile banking platforms.

Bank of America has expanded into several new US markets, with scale globally positioning them ideally to benefit from accelerating loan growth over the next two years.  Moreover, unlike smaller peers, scale allows the bank to substantially increase investment over the next few years without notably jeopardizing returns, driving further market share gains.

Warren Buffett owns 1,032 852,006 bank shares, 13% of the float, and 9.5% of Berkshire Hathaway’s portfolio.

Coca-Cola

This is another company that remains a top Warren Buffet holding as he owns a massive 400 million shares and pays a dependable 3.22% dividend. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, offering consumers 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
• Del Valle

Globally, they are the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks.

Through the world’s most extensive beverage distribution system, consumers in more than 200 countries enjoy the company’s beverages at a rate of more than 1.9 billion servings a day. It’s also important to remember that the company owns 16.7% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers.

Honeywell International

If global growth picks back up, this top industrial sector stock could be poised for a solid 2024 and pays a 2.20% dividend. Honeywell International Inc. (NYSE: HON) engages in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, Europe, and internationally.

The company’s Aerospace segment offers:

• Auxiliary power units
• Propulsion engines
• Integrated avionics
• Environmental control and electric power systems
• Engine controls
• Light safety, communications, navigation hardware
• Data, and software applications,
• Radar and surveillance systems
• Aircraft lighting
• Advanced systems and instruments
• Satellite and space components
• Aircraft wheels and brakes
• Spare parts; repair, overhaul, and maintenance services
• Thermal systems, as well as wireless connectivity services

Its Honeywell Building Technologies segment provides software applications for building control and optimization, sensors, switches, control systems, and instruments for energy management, access control, video surveillance, fire products, and system installation, maintenance, and upgrades.

The company’s Performance Materials and Technologies segment offers automation control, instrumentation, and software and related services; catalysts and adsorbents, equipment, and consulting; and materials to manufacture end products, such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, as well as provide materials based on hydrofluoric-olefin technology.

Its Safety and Productivity Solutions segment provides personal protective equipment, apparel, gear, and footwear; gas detection technology; custom-engineered sensors, switches, and controls for sensing and productivity solutions; cloud-based notification and emergency messaging; mobile devices and software; custom-engineered sensors, switches, and controls; and data and asset management productivity solutions.

Merck

This company remains a leading healthcare stock for conservative investors and pays a 2.83% dividend. Merck & Co. Inc. (NYSE: MRK) is a health care company worldwide.

It has two segments:

• Pharmaceutical
• Animal Health

The Pharmaceutical segment of Merck is at the forefront of innovation, offering a diverse range of human health pharmaceutical products in:

• Oncology
• Hospital acute care
• Immunology
• Neuroscience
• Virology
• Cardiovascular
• Diabetes
• Vaccine products, such as preventive pediatric, adolescent, and adult vaccines

The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, health management solutions and services, and digitally connected identification, traceability, and monitoring products.

Merck serves:

• Drug wholesalers
• Retailers
• Hospitals
• Government agencies
• Managed health care providers, such as health maintenance organizations
• Pharmacy benefit managers, and other institutions
• Physicians, physician distributors, veterinarians, and animal producers

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