Investing

4 Ultra-Secure Dividend Stocks on Sale to Buy Now and Hold Forever

One nice result from the volatility in the markets over the past seven weeks is to lower prices on the stocks that investors who need consistent and safe income may be looking to buy. The driving down of interest rates may have kept the economy from totally blowing up, but it has been a burden on older investors looking to generate solid income. Ten years ago, certificates of deposit were yielding 5% and more, now investors are thrilled to get 1.25%, and the thought of buying Treasury bonds yielding 2.60% for 30-year debt is hardly appealing.

We screened the Merrill Lynch research database, not only for the top dividend yielding stocks rated Buy, but also for the stocks with the analysts lowest volatility risk ratings. We came up with four companies that have been around for years that will continue to pay and increase dividends.

AT&T

This company will continue to serve customers regardless of overall market and economic conditions. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE.

The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions. With shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic, but increased device financing plans.

The company announced recently it is working with Salesforce.com to connect Internet of Things data from AT&T’s solutions into Salesforce’s Customer Success Platform. By connecting AT&T M2X into Salesforce’s Service Cloud, companies can automatically create and route service requests, cases or tickets through pre-built workflows.

While fourth quarter earnings were in line with forecasts, and slightly below the Wall Street estimates, a change in accounting for the entertainment group lowered revenue/EBITDA by $300 million for the quarter. Merrill Lynch notes that this knocked three cents off the bottom-line numbers. So all in all, a solid quarter, and another reason for conservative accounts to own the stock, especially with solid DirecTV additions and mid-single-digit earnings growth estimated for 2016.

AT&T investors receive a huge 5.25% dividend. The Merrill Lynch price target for the stock is $40, and the Thomson/First Call consensus estimate is $37.54. Shares closed Friday at $36.57.


Altria

The maker of tobacco products and wine has posted very solid numbers, and the rest of 2016 looks outstanding. 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 relative 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 the analysts expect support of the strong dividend, which they believe will continue to climb, and strong share repurchase activity.

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.

While fourth-quarter earnings came in slightly below estimates for the first time in almost two years, the company expects 2016 full-year adjusted diluted earnings per share to be $3.00 to $3.05, which excludes the restructuring charges of approximately $0.05 per share. This is positive growth, and very solid in an otherwise low growth world.

Altria investors receive a 3.73% dividend. Merrill Lynch has a $66 price target, and the consensus target is $65.14. The stock closed Friday at $60.56.

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.