With the market very expensive, and trading like it is very toppy, investors are stuck between the proverbial rock and a hard place. The bond market, especially U.S. Treasury bonds, looks like a total bubble, and many people just don’t have the stomach for high-yield or emerging market debt. So the focus shifts back to stocks that pay a solid divided, and unfortunately many of those are also trading at 52-week highs.
We screened the Merrill Lynch research database looking for stocks rated Buy that also paid at least a 3% dividend. In addition, we screened for stocks that have been hit hard either recently, within the past six months. We found four outstanding values for investors to consider now.
This company remains a top Warren Buffet holding and offers not only safety, but an incredible strong worldwide brand. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, its portfolio features 20 billion-dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade and Minute Maid. Globally, it is the top provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy its beverages at a rate of more than 1.9 billion servings a day.
Despite reporting second-quarter earnings that came in above some estimates, slower growth and flat volumes brought out the sellers and they tagged the stock big time. It is important to remember though that the company own 31.5% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors are paid an outstanding 3.21% dividend. The Merrill Lynch price target for the stock is $52, and the Wall Street consensus price target is $48.35. The stock closed Thursday at $43.65.
This company is in the automobile sector, and shares look to be very inexpensive at current levels. Despite all the recall troubles and litigation issues, hedge funds and mutual funds are continuing to stick with General Motors Co. (NYSE: GM), as many view the stock as very undervalued. GM trades just below an incredible 5.67 times estimated 2016 earnings. The company, like competitor Ford, has benefited from incredible sales in China to boost revenue. GM invested heavily in China decades ago, and it grabbed a big chunk of what is now the world’s largest auto market.
Long-term patient investors that can look beyond current issues may stand to make outstanding money on the auto giant, especially as the oil price plummet and low gasoline prices continue to push new buyers into showrooms. The stock was hit hard this week as Ford missed estimates and much of the blame was placed on incentives, which have been much lower at GM.
The company reported very solid second-quarter earnings recently, and with gas prices staying at the lowest levels in years, and GM producing some of the best new models in years, the future for the battered stock looks very good.
GM investors receive an outstanding 4.9% dividend. The $42 Merrill Lynch price target is well above the consensus target of $36.69. Shares closed Thursday at $30.99.