Long-time stock market participants can feel it, and despite the many bullish pundits on Wall Street, the fact of the matter is the bull market is old and getting tired. Many portfolio managers and hedge funds are chasing the same small group of stocks pushing them higher, and while the overall market tends to go in the same direction, by almost every measure things are expensive. The problem for many is there are really no alternatives, especially for total return.
We decided to revisit one our favorite group of stocks at 24/7 Wall St.: the dividend aristocrats. The 2017 S&P 500 Dividend Aristocrats list is 51 companies that have increased dividends (not just remained the same) for 25 years straight. Keep in mind, just because they are on this list now doesn’t mean in the future they won’t be forced to reduce their dividend. We screened the list for stocks rated Buy in the Merrill Lynch research universe and found five that looked solid and safe for nervous investors.
This top Wall Street energy pick is still down over 15% in 2017. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
For 75 years in a row, Exxon has raised its dividend on a split-adjusted basis. Thanks to the company’s vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.
Exxon shareholders are paid a 3.72% dividend. The Merrill Lynch price objective for the stock is $90, while the Wall Street consensus target price of $83.93 is closer to Tuesday’s open at about $82.42.
This top Warren Buffet holding not only offers safety but an incredible strong worldwide brand with 40% overseas sales. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with 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 and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.
Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. With coolers getting packed for picnics, parades and vacations you can bet that they will be stuffed with products from this iconic American company. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors receive a 3.17% dividend. Merrill Lynch has a $52 price target, while the consensus target is $48.11. Shares were last seen trading at $46.80.