5 Blue Chip Dividend Stocks to Buy and Hold Forever

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Investing is something that many people make harder than it really should be. The biggest part of long-term gains in the market can come from the dividends that the top companies pay and increase on a regular basis. Dividends and increases in price create total return, and that is the key to building wealth over the long term. Another key? Don’t get shaken out by “the sky is falling” talking heads, that in many cases are failed Wall Street losers that still get a forum due to name recognition.

We screened the Merrill Lynch research database for dividend stocks that are rated Buy, have the lowest risk profile at the firm, have raised their dividend regularly and are in sectors that tend to perform regardless of near-term market conditions. We found four that fit the bill perfectly.

AT&T

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 most reliable 4G LTE and the strongest signal. 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.

AT&T 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 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 noted that this knocked three cents off the bottom line numbers. 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 5.17% dividend. The Merrill Lynch price target for the stock is $40, and the Thomson/First Call consensus estimate is $37.63. Shares closed Friday at $37.13.


Altria

The maker of tobacco products and wine has posted very solid numbers, and 2016 looks to be another solid year. Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and its 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 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 or so, which excludes restructuring charges of approximately a nickel per share. This is positive growth, and solid in an otherwise low growth world.

Altria investors receive a 3.67% dividend. Merrill Lynch has a $66 price target, and the consensus target is $64.88. The stock closed Friday at $61.54.