Merrill Lynch Has 4 Safe High-Dividend Utility Stocks to Buy

Infrastructure

Published: January 19, 2016 10:55 am

Last Updated: January 13, 2020 2:53 pm

All we heard for most of 2015 is the trade in the utility stocks is over. Interest rates were going higher, and the stocks will be sold off big time. And the pundits were right for at least the first half of 2015. The high-flying sector that brought wonderful returns in the years following the 2008 and 2009 meltdown got hammered. But guess what? Only one sector is higher so far in 2016, and it is the utility sector.

With the thought of any further interest rate hikes all but off the table, and current Treasury yields lower than they were at this time last year, buying safe utility stocks now to ride out the storm makes absolute sense for growth and income and conservative accounts. We screened the Merrill Lynch research database and found four outstanding stocks to buy now.

Dominion Resources

Many of the Wall Street firms that we cover are becoming more positive on utilities again after last year’s underperformance, and this company tops many lists. Dominion Resources Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems, with 928 billion cubic feet of storage capacity, and serves utility and retail energy customers in 13 states.

Dominion operates via three divisions. Dominion Virginia Power is focused on regulated electric transmission and distribution that serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. Dominion Generation generates electricity through coal, nuclear, gas, oil, hydro and renewable sources. Dominion Energy centers around regulated natural gas distribution and storage.

Investors are paid a solid 3.76% dividend. The Merrill Lynch price target for the stock is $79, and the Thomson/First Call consensus target is $77.59. The stock closed Friday at $68.88.