With the markets warming up to the reality of a Donald Trump presidency and administration, some people have become nervous about dividend-paying stocks as they see higher interest rates and inflation ahead. While the bond proxy sectors like real estate investment trusts and utilities may hold less appeal as they are very slow growers, other sectors like consumer staples and telecoms still make sense since they can continue to grow market share.
We screened the Merrill Lynch research database for stocks with the firms best volatility rating, and solid growing dividends that were rated Buy. We found five that growth and income investors could buy now, and put in their portfolios forever.
What investors will want to not ignore is that some of these are still well off of highs. The post-election rally has been targeting many infrastructure and higher interest rate winners, so some of these may be overlooked.
This company has had an incredible run this year but is off over 10% in less than six weeks. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV. The company has TV customers in the U.S. and 11 Latin American countries. In the U.S., 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. Trading at a very cheap 14.3 times estimated 2017 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors has not only driven traffic, but increased device financing plans.
AT&T is in the Merrill Lynch US1 portfolio and has several major catalysts that will likely drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-Verse subscribers, and increasing penetration of unlimited data plans. Many on Wall Street believe that the company is well-positioned to address on-going traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments.
Other top Wall Street analysts have cited the company’s positive commentary on free-cash-flow and improving video/broadband trends this year, with single truck-roll and new converged offerings expected to be coming soon.
AT&T investors are paid a huge 5.08% dividend. The Merrill Lynch price target is set at $46, and the Wall Street consensus price objective is at $40.76. Shares closed Tuesday at $38.55.
The Coca-Cola Company
This company remains a top Warren Buffet holding and offers not only safety, but an incredible strong worldwide brand. The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, Vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, they are the No. 1 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 their beverages at a rate of more than 1.9 billion servings a day.
The company reported third quarter earnings that beat analysts’ estimates, but blamed strong international headwinds and political uncertainty for lower revenue. Net sales in the third quarter fell 7 percent from a year earlier to $10.6 billion, but were higher than Wall Street estimates of $10.5 billion. Coke’s better-than-expected revenue was helped by higher prices for sodas and a strong demand for water and sports drinks in North America.
Coke reported earnings of 49 cents for the quarter, excluding items, beating the average analyst forecast of 48 cents from Thomson Reuters. This makes seven-straight quarters that the company has surpassed Wall Street’s expectations.
It’s also important to remember that the company own 31.5% of Monster Beverage (NASDAQ: MNST), which continues to deliver big numbers and provide strong growth potential.
Coca-Cola investors are paid an outstanding 3.38% dividend. The Merrill Lynch price target is set at $50, while the consensus price target figure is set at $46.72. The stock closed Tuesday at $41.37.