With the holidays over, traders and portfolio managers are finally returning to action, while investors are focused on what to own for 2017. One thing is for sure: in less than three weeks everything that was in place from a policy standpoint for the past eight years in Washington is about to change, and that could have big implications for stocks.
Despite the fact the interest rates will be going higher over the next two years, the increases will be small so dividend yielding growth stocks still make sense for total return accounts. We recently focused on the new 2017 Dogs of the Dow.
The 2017 Dividend Aristocrats portfolio is also out, and the list is spectacular. The Dividend Aristocrats are S&P 500 constituents that have increased their dividend payouts for 25 consecutive years or more. We screened the new list against the Merrill Lynch research database and found five top companies from different sectors rated Buy.
This company had an incredible run last year and has rallied back smartly from lows printed in November. 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.
AT&T is in the Merrill Lynch US 1 portfolio and has several major catalysts likely to drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-Verse subscribers and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address ongoing traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.
Other top Wall Street analysts have cited the company’s positive commentary on free cash flow and improving video/broadband trends later this year, with single truck-roll and new converged offerings expected to be coming next month.
AT&T investors receive a 4.61% dividend. The Merrill Lynch price objective is $46. The Wall Street consensus target price is $41.29. Shares closed Friday at $121.72.
Shares of this top pharmaceutical stock with very solid growth potential are down over 15% since August. Abbott Laboratories (NYSE: ABT) is a leading diversified global health care company that develops, manufactures and markets branded generics, medical devices, nutritional products and diagnostic solutions.
The company recently agreed to acquire the equity in Minnesota-based Tendyne Holdings that it does not already own for $250 million plus future payments tied to regulatory milestones. Wall Street likes the purchase and the way the company is putting its substantial balance sheet to work.
The company also offers a diversified large cap play as earnings are split between five well-positioned business segments: Nutritionals (31% of revenues), Vascular (13%), Generic Pharmaceuticals (20%) and Diagnostics (25.5%) and Diabetes (10.5%).
Last year, CEO Miles White, who has been at the firm for over three decades, bought a stunning $45.5 million worth of company stock, which added to his already substantial holdings. The purchase made him one of the top 100 shareholders.
Abbott Labs investors receive a 2.76% dividend. Merrill Lynch has a $50 price target. The consensus target is $46.85. The shares closed last Friday at $38.41.