With the recent Federal Reserve commentary out for all to see, unless something earth-shattering happens in the next 30 days, it sure looks like the Fed will raise interest rates for the first time in more than eight years. In fact, the markets actually have cheered the hike this week with some of the strongest rallies in months, as the overhang of when the liftoff begins is removed, and evidence of a strengthening economy is starting to show up.
A new Merrill Lynch research report says the market has spoken, and the Fed is free to start the hikes in December. Like we have mentioned previously, the increase will be very small and very slow. The December increase should be 25 basis points, or one-quarter of 1%. Merrill Lynch says that energy, materials and financials typically are the best performing. We screened the Merrill Lynch research universe for one top stock rated Buy and that pays a solid dividend from each sector.
This company may offer investors some of the best total return possibilities. The Merrill Lynch analysts see it as a top yield play and it is on firm’s US1 list. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide. Its portfolio includes shale and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and exploration prospects.
Many Wall Street analysts feel Conoco can accelerate growth from reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a newly disclosed sizable position in the Permian Basin.
While the company reported a third-quarter loss recently, the largest U.S. independent oil company lowered its 2015 spending target in response to the lingering slump in crude prices. Solid cuts in unnecessary spending, and the possibility of increased sales of non-core assets, remain ongoing positives.
Conoco investors receive a very strong 5.47% dividend. The Merrill Lynch price target on the stock is a whopping $77. The consensus price target is lower at $62.38. Conoco closed Thursday at $53.56.