After literally years of no volatility, that sleeping giant has emerged, and while it may not spell the end of the stock market rally, it certainly could put us back into what are more normal market metrics. Typically the stock market will have as many as three 5% declines a year. The recent declines that started in early February were the biggest in over two years, and one thing’s for sure: You can bet that the rest of the year will trend back toward more normal market volatility.
With the recent increase in volatility on our minds here at 24/7 Wall St., we searched the Merrill Lynch research universe for large-cap blue-chip stocks that were rated Buy and that paid at least a 4% dividend. We found five that look like good places to move capital to now.
The maker of tobacco products and wine has posted very solid numbers and remains a solid play for income investors. Altria Group Inc. (NYSE: MO) is a top mega-cap consumer discretionary stock to buy on Wall Street, and the company’s 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 along with strong share repurchase activity. The board also recently raised the dividend by more than 8%.
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.
Altria investors are paid a hefty 4.11% dividend. Merrill Lynch has an $82 price target on the stock, and the Wall Street consensus estimate is $77.23. The stock closed most recently at $64.19 per share.
Many of the Wall Street firms that we cover are very positive on this top utility. Dominion Resources Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems, with 928 billion cubic feet of storage capacity, and serves utility and retail energy customers in 13 states.
Dominion operates via three divisions. Dominion Virginia Power is focused on regulated electric transmission and distribution that serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. Dominion Generation generates electricity through coal, nuclear, gas, oil, hydro and renewable sources. Dominion Energy centers on regulated natural gas distribution and storage.
Dominion Resources investors are paid a solid 4.47% dividend. The Merrill Lynch price target for the shares is $79, and the posted consensus target is $80.86. The shares closed Tuesday’s trading at $74.75 apiece.
This company remains a top Wall Street energy pick and is still down about 10% in 2018. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
For 75 years in a row, Exxon has raised its dividend on a split-adjusted basis. Thanks to the company’s vertically integrated model in the oil and gas business, its profitability doesn’t suffer through commodity price swings like a company that’s a pure play in one segment of the value chain.
Shareholders in Exxon are paid a nifty 4.07% dividend. Merrill Lynch has set its price objective at $102, while the posted consensus figure is much lower at $87.24. The stock closed Tuesday at $75.75 per share.