Wall Street is desperately trying to handicap what stocks will do well depending on which presidential candidate wins. A Trump victory would perhaps favor stocks that are helped along by a weaker dollar. Conversely, a Clinton win probably would favor companies that are in renewable energy and similar areas. Regardless of who ultimately wins, rates are going to stay low, possibly for years, so solid big dividend stocks will remain in favor.
We screened the Merrill Lynch research universe looking for companies with at least a 4% dividend yield that should not see their business affected either way by the change in the White House, particularly those rated Buy at Merrill Lynch. We found four that should be just the ticket, regardless of the ticket that wins, that is.
This company has had an incredible run this year, and the Merrill Lynch team sees it going even higher. 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. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With its shares trading at a very cheap 14.3 times estimated 2016 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 inline numbers for the second quarter, and while the consolidated revenue number was slightly higher than the Merrill Lynch estimate, the EBITDA was slightly below. Company management noted it is on track to meet or exceed current estimates for the year.
Many Wall Street analysts have cited the company’s positive commentary on free cash flow, in addition to improving video/broadband trends later this year, with single truck-roll and new converged offerings expected to be coming in October.
AT&T investors receive a 4.45% dividend. The Merrill Lynch price target for the stock is $46, and the Wall Street consensus target is $42.27. Shares closed Tuesday at $43.08.
This is a higher yielding utility stock for accounts needing income. FirstEnergy Corp. (NYSE: FE) is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation’s largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Its transmission subsidiaries operate more than 24,000 miles of transmission lines that connect the Midwest and Mid-Atlantic regions.
FirstEnergy is making significant upgrades to the infrastructure of some of its top holdings. Pennsylvania Electric is spending nearly $11 million for infrastructure improvements, which include rehabilitating and replacing power lines and installing remote-controlled devices and more durable protective devices on wires. The improvements are in an effort to help avoid customer disruptions.
Metropolitan Edison Company is starting work on $7 million of similar projects. While Potomac Edison is investing $5 million in building a 14.5-mile power line carrying a capacity of 34.5 kilovolt to minimize the number of affected customers in case of service disruptions. Potomac is also constructing a new substation consisting of three transformers with construction expected to be complete by 2017.
FirstEnergy investors receive a 4.38% dividend. Merrill Lynch has a $38 price target. The consensus target is $36.27. The stock closed Tuesday at $36.84.