Investing

Merrill Lynch US 1 List On Sale: 4 Top Dividend Stocks to Buy Now

Eli Lilly

This stock checks in high at many top Wall Street firms, and it is the only large pharmaceutical on the US 1 list. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. It generates revenues from its pharmaceutical product and animal health segments

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

The company reported third-quarter earnings that were well above the consensus estimates, but revenues came in just under expectations, reflecting some potential generic competition for Cymbalta and Evista in the United States, as well as some negative currency movement. Trajenta, Strattera, Forteo and the animal health business should all help to offset the impact of genericization of former top-selling drugs. While fourth-quarter estimates were lighter than expected, the analysts at Merrill Lynch remain very positive on the stock.

The company’s new cancer drug Cyramza won FDA approval for label expansion last year. It treats patients suffering from metastatic colorectal cancer. This was the fourth Cyramza approval in a one-year period; it already has approval to treat advanced or metastatic gastric or gastroesophageal junction adenocarcinoma and metastatic non-small cell lung cancer.

Shareholders are paid a 2.47% dividend. The $108 Merrill Lynch price target is well above the consensus target of $99.50. Shares closed Friday at $82.48.

3M

This top industrial could really jump with an economic pickup and is one of the top 10 picks for 2016. 3M Co. (NYSE: MMM) is a diversified, global manufacturer. Its businesses are technology-driven and organized under five segments: Consumer, Safety and Graphics, Electronics and Energy, Health Care, and Industrial. Its popular brands include Scotch, Post-It, 3M and Thinsulate. The company also holds over 500 U.S. patents.

The stock was scorched in December when 3M released lowered year-end guidance for 2015, citing weak macroeconomic conditions across the globe. However, it did offer what Merrill Lynch feels is solid 2016 guidance, as the company anticipates GAAP earnings will increase 7% to 12% year over year. Organic local-currency sales growth is expected to be 1% to 3%, while free cash flow conversion rate is anticipated to be 95% to 105%. The analysts feel that the 2016 earnings growth will come in at the high end of the company’s peer group.

Merrill Lynch feels that the pullback makes for an outstanding entry point for new capital and accounts that are adding to positions.

3M investors receive a 2.95% dividend. The Merrill Lynch price target is $178, and the consensus target is $159.73. The stock closed Friday at $139.52.


Not only are all these blue chip dividend stocks on sale, they offer solid total return potential, and they all appear to be set up for a very solid 2016. Investors looking to add stocks that will fare well in a higher volatility world would do well adding these to growth portfolios now.

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