More Dogs of the Dow Are Breaking Out With Upside

Investing

Published: March 9, 2016 8:25 am

Last Updated: January 13, 2020 12:12 pm

For the second time in less than a month, the Dogs of the Dow are receiving attention from a major Wall Street firm, and investors that bought the stocks are licking their chops in anticipation of more gains. The Dogs of the Dow are the 10 highest yielding stocks in the venerable index when trading starts in the new year. We recently wrote about the highest yielding stocks in the group.

A new research report from the technical analysts at Merrill Lynch points out that the 2016 Dogs of the Dow have shown leadership since the year started, and four of the companies now have what technicians call strong absolute and relative charts. Four of the stocks are breaking out, which the Merrill Lynch team refers to as the “Lead Dogs.” Three are rated Buy and one comes in with a Neutral rating.

Exxon Mobil

This company is one of Merrill Lynch’s top picks for 2016. Exxon Mobil Corp. (NYSE: XOM) is an energy sector play that the Merrill Lynch analysts are very positive on for the long term as the overall corporate strength of the massive integrated giant plays a significant part in the company’s usually solid earnings reporting pattern, as well as in maintaining dividend coverage.

The global downstream chemical segment plays a huge part for Exxon. It may be a part that many others on Wall Street do not fully appreciate as the segment contributes an estimated 16% of overall total revenue. Some very solid reasons for adding the stock to a long-term growth portfolio are that the company has consistently demonstrated disciplined investing, operational excellence and technological innovation.

The company recently appointed the head of its refining business as its new president, which makes him the probable successor to CEO Rex Tillerson, a move that was designed to avoid raising eyebrows on Wall Street. The new president, Darren Woods, is a 23-year company veteran, and he should keep the Goliath on the steady path for growth and progress.

Exxon investors are paid a very sizable 3.53% dividend. The Merrill Lynch price target for the stock, which is rated Buy, is $95. The consensus price objective at Thomson/First Call is lower at $79.86. The stock closed on Tuesday at $82.63 per share.