Merrill Lynch Still Very Bearish: 4 Safe Dividend Stocks to Buy Now

Investing

Published: February 24, 2016 8:25 am

Last Updated: January 13, 2020 12:48 pm

While many market participants are thrilled with the action from this week and last, and the short sellers did face some very solid buying pressure, not everybody is feeling relieved, especially after Tuesday’s reversal. With earnings expected to be less than stellar, and the economy stuck in what many feel is a snail-like slow growth mode, one of the biggest and most influential firms on Wall Street is just not buying it.

A recent report from the strategists at Merrill Lynch flat-out says to stay bearish and defensive, and with Treasury bond yields at recent lows, the stock market surprisingly actually remains one of the few good places to reside, other than cash, which earns next to nothing. The Merrill Lynch team recommends staying long consumer staples, utilities and telecommunication companies.

We screened the Merrill Lynch research database and found four stocks rated Buy that fit right into these categories.

PPL

This utility posted inline fourth-quarter earnings but came in a little light on the revenue side. PPL Corp. (NYSE: PPL) serves 321,000 natural gas and 397,000 electric customers in Louisville and 16 surrounding counties, and 543,000 customers in 77 Kentucky counties and five counties in Virginia. It also provides electric delivery services to approximately 1.4 million customers in Pennsylvania and operates electricity distribution network for the Midlands, South West and Wales in the United Kingdom.

In addition, it offers a range of customer-care and back-office services to competitive retail energy suppliers, including customer enrollments, contract management, electronic data exchange, simple and complex billing and call center operations, comprising telemarketing, payment processing and collections of overdue accounts.

PPL is one of the leading utility companies in the United States that plans to continue to increase regulated operations and lower earnings volatility attached to competitive operations. It raised cash and lowered debt late last year by selling some hydroelectric assets to NorthWestern energy.

PPL investors receive a generous 4.22% dividend. The Merrill Lynch price target for the stock is $38, and the Thomson/First Call consensus target is $37.78. Shares closed Tuesday at $36.07.