Investing

Merrill Lynch Has 4 Blue-Chip Dividend Stocks to Buy and Hold Forever

The more investment experience you have, the more you want to stick with companies that have shown the ability to stay relevant while still generating dividends and dividend growth. Many top strategists on Wall Street feel that, after lagging in 2015, dividend stocks are poised to rebound in 2016 as the Federal Reserve finally starts the long anticipated interest rate increases and the headline risk goes away.

Given that the chances for dividend stocks to rebound do look solid, we screened the Merrill Lynch research universe database for blue chip stocks with good dividends that investors can not only buy for 2016, but can hold indefinitely, as they have shown over the years staying power and a long history of dividend increases. We found four, which are all rated Buy.

Altria

The maker of tobacco products and wine has posted very solid numbers through the first three quarters of 2015, and the fourth quarter should be solid as well. Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and the company’s Marlboro brand remains one of the most recognizable in the world.

Many Wall Street analysts concede that the stock has solid downside support owing to the generous dividend yield, which remains at a huge premium in relation to the 10-year Treasury rate. Cash flow generation and the return of cash to Altria shareholders remain key facets of the company’s total shareholder return, and analysts expect support of the strong dividend, which they believe will continue to climb, as well as strong share repurchase activity.

Altria reported adjusted earnings per share for the third quarter of 2015 that were in line with the Wall Street estimates but exceeded the prior-year quarter figure by 8.7%, backed by strong performance of the core tobacco business and the leading premium brands. To diversify away from cigarettes and cigars, Altria has expanded its portfolio into new categories, like wine, e-cigarettes and a 27% stake in brewer SABMiller, which together generated nearly 10% of its pre-excise tax revenue last quarter. With SABMiller being acquired, Altria will have a huge stake in the world’s biggest beer company.

Altria investors receive a solid 3.96% dividend. The Merrill Lynch price target for the stock is $66, and the Thomson/First Call consensus price target is $64. The stock closed Friday at $58.51.

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