Investing

5 Merrill Lynch US 1 Stocks to Buy Also Pay Big and Growing Dividends

Merck

This remains a leading health care stock pick for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.

The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.

Merck shareholders receive a 2.66% dividend. The $88 Merrill Lynch price target is well above the consensus target last seen at $83.02. The shares closed trading at $82.69 on Friday.

Target

This remains a solid and safe retail total return play now. Target Corp. (NYSE: TGT) is one of the largest discount retailers in the United States, operating roughly 1,800 Target stores across the country. The company sells merchandise in its Signature Categories Style, Baby, Kids and Wellness, as well as other products in both physical Target stores and online at Target.com.

Over the past couple of years, Target has poured tons of money into its e-commerce offerings, overhauling its stores and refreshing its inventory to compete better against Amazon. Target has even embraced the same-day delivery concept and is expanding retail floor space for toys as it looks to scoop market share after the closing of Toys “R” Us.

Solid numbers and a very positive analysts day had the Merrill analysts noting that they believe the company’s ability to moderate fulfillment costs through its “stores as hubs” model should drive margin improvement in fiscal 2020. They also feel the valuation is compelling at current levels.

Target shareholders are paid a 2.98% dividend. Merrill Lynch has set its price objective at $100. That compares to the much lower consensus target of $85.73, as well as the most recent close at $76.75.

Williams Companies

This top energy company is also a solid pick for more conservative accounts. Williams Companies Inc. (NYSE: WMB) is now largely a pure-play domestic natural gas infrastructure company that has a 74% ownership interest in its underlying master limited partnership, Williams Partners.

The company has a lower risk, fee-based business model with some volume sensitivity. Natural gas demand continues to be driven by liquefied natural gas (LNG) exports, power generation and industrials. In addition to steady demand growth, Marcellus production and associated gas in the Permian are expected to continue to be primary supply drivers.

Shareholders receive a very sizable 5.52% dividend. The Merrill Lynch price target is at $31. The analysts’ consensus target is $31.94, and the shares were last seen trading at $27.56 apiece.

These five outstanding ideas from the US 1 team at Merrill Lynch are decidedly more conservative than some of the other members. Given their strong and consistent dividends, they offer investors excellent total return potential and a safer way to play the stock market going forward in 2019.