4 Top Merrill Lynch Growth Stocks to Buy Also Pay Huge Dividends

February 7, 2017 by Lee Jackson

Despite the chatter that the Federal Reserve is poised to raise interest rates as many as three times this year, investors for the most part have responded with a yawn. While the yield on the 30-year Treasury has bounced off the lows from last summer, it remains much lower than in 2013, when there was little if any reason to suspect rates were going higher.

With long-term rates looking like they will stay at historically low levels for the next couple of years, dividend-paying stocks make even more sense than ever. We screened the Merrill Lynch stock research universe look for companies that were rated Buy, had good upside potential and paid big dividends. We found four that make good sense for investors now.

Apollo Global Management

This company has made a solid run off the lows printed this time last year, but it still trades way below highs printed in 2014. Apollo Global Management. LLC (NYSE: APO) is a leading global alternative asset manager, with offices worldwide and headquarters in New York. It manages investments across three operating segments: Private Equity, Credit and Real Estate. Apollo

Merrill Lynch recently upgraded the stock to a Buy rating, citing the company’s solid fourth-quarter results as a major reason for the re-rating. In addition, the numbers were boosted by the recent highly successful initial public offering of Athene.

Apollo investors receive a 6.41% dividend. The Merrill Lynch price target for the stock is $27. The consensus target is $23.92.Shares closed trading on Monday at $22.41.

GameStop

This top retailer looks to benefit from new releases this year. GameStop Corp. (NYSE: GME) operates as an omnichannel video game retailer. It sells new and pre-owned video game hardware; physical and digital video game software; pre-owned and value video game products; video game accessories, such as controllers, gaming headsets, memory cards and other add-ons for use with video game hardware and software; and digital products, including downloadable content, network points cards, prepaid digital and subscription cards and digitally downloadable software.

The company also sells mobile and consumer electronics, including smartphones, tablets, headphones and accessories, as well as pre-owned smartphones; personal computer (PC) entertainment software in various genres, including sports, action, strategy, adventure/role playing and simulation; and strategy guides, magazines and gaming-related toys.

Despite a rather tough holiday selling season, the analysts are positive for 2017, and many across Wall Street feel that at current trading levels the company is an outstanding value buy. Merrill Lynch noted in a recent research report:

We are slightly lowering our estimates and price objective but reiterate our Buy. We remain cautious but are encouraged by the next 3-4 month software lineup, Nintendo Switch and non-gaming segments.

GameStop investors receive a 6.0% dividend. Merrill Lynch has a $28 price target, and the consensus target is $26.32. The shares closed Monday at $24.68.

Green Plains Partners

This clean energy stock has gained a strong Wall Street following. Green Plains Partners L.P. (NASDAQ: GPP) is an unconventional renewable energy pick, but with a market capitalization just over half a billion dollars and a big dividend yield, the company could be a nice income or growth hold.

The Nebraska-based company specializes in the storage, processing and transportation of ethanol fuel. Ethanol is already a major component of current fuel options. Most retail gasoline contains some ethanol, but there is a push to increase the use of pure ethanol fuel for commercial purposes.

Demand for renewable liquid fuels is expected to grow two-fold by 2030 and four-fold by 2040. Green Plains is looking to capitalize on this push and adoption by providing the infrastructure that will underpin the industry as it expands.

The company raised its distribution back in January, and billionaire investor Steve Cohen’s family office, Point72 Asset Management, has boosted its holding of the stock to 2.12 million shares from 928,100. The company will report fourth-quarter earnings tomorrow.

Shareholders receive an outstanding 9.35% distribution. The $22 Merrill Lynch price target is in line with the $22.20 consensus target. Shares closed Monday at $18.40.

Verizon Communications

A top telecommunications pick at Merrill Lynch for 2017, Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.

Last year Verizon announced the purchase of Yahoo’s core operating business for $4.8 billion in cash, although terms may be changing due to the massive data breaches at the company. The analysts feel the purchase plays into Verizon’s strategic drive to expand into advertising and content, and they also think the transaction is largely immaterial from a financial perspective.

In addition the Yahoo purchase, recent chatter has linked that company with a possible pursuit of Charter Communications. Merrill Lynch sees the deal as potentially dilutive for free cash flow in the first year but positive in year two. Some see regulatory approval as difficult but possible.

Verizon investors receive a 4.81% dividend. The $59 Merrill Lynch price objective compares with the consensus target of $52.23. Shares closed Monday at $48.03.

These four stocks are paying solid distributions, not trading at all-time highs, and rated Buy at Merrill Lynch. For investors seeking total return. these all make good sense.

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