Wall Street Is as Bearish as 2009: 4 Top Dividend Stocks to Buy Right Now

Investing

Published: February 2, 2016 9:50 am

Last Updated: January 13, 2020 1:46 pm

If you remember the dark days of 2009, then it may surprise you to know that currently Wall Street strategists and those who prognosticate the future are as bearish as they were then. In a new research note from Merrill Lynch, strategist Savita Subramanian points out that the sell side indicator fell recently to a six-month low of 52.6, which suggests that much of Wall Street is as negative as 2009.

The good news for investors is that kind of over-the-top bearishness is really a positive. Typically huge market drops and bear markets occur when everybody is giddy and speculation is running rampant. Think technology stocks in late 1999 and early 2000. That is hardly the case now, and Subramanian and her team are encouraged by the bearish stance and the persistent underweighting by portfolio managers of U.S. equities.

We screened the Merrill Lynch research universe database and found four outstanding dividend stocks that are rated Buy and also offer tremendous value now.

Cisco

This is one of the top mega-cap technology stock picks on Wall Street, and perhaps a surprising defensive pick for volatile markets like we have witnessed. Cisco Systems Inc. (NASDAQ: CSCO) posted disappointing earnings in November, and many on Wall Street have lowered the price target for the networking giant significantly. Cisco is also one of the 24/7 Wall St. top 10 stocks to own for the next decade.

Last year Cisco won an important contract for the Verizon build-out of its next-generation 100G metro network. While Cisco’s optical business is small as a part of total revenue, this win is seen by Wall Street as a significant endorsement of the investments Cisco has made into its optics business.

Analysts across Wall Street point to an estimated double-digit bookings momentum for Cisco’s Meraki Cloud Services. Many think that Meraki is likely to be a $1 billion plus run-rate business this year, with an incredible 50% to 70% compounded annual growth rate. A jump from 40 GE to 100 GE data center switching and next generation security are also adding to the total sales profile and product mix.

Cisco investors receive a 3.61% dividend. The Merrill Lynch price target for the stock is $30, and the Thomson/First Call consensus target is $30.55. The shares closed most recently at $23.48.