5 Merrill Lynch High-Quality and Dividend Yield Stocks to Buy for 2020

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With the fourth quarter of 2019 and the decade almost over, many of the top companies we follow on Wall Street are making some changes to their curated lists of stock picks for clients. With the market showing increasing volatility, much of it trade related, it makes sense for investors to examine the lists and make some changes, as the rest of the year could have additional volatility and the political and geopolitical cycle in 2020 could prove to be very explosive.

We regularly watch the Merrill Lynch High Quality & Dividend Yield List of top dividend stock recommendations for changes, and while no new companies were added this week, they did remove Automatic Data Processing Inc. (NYSE: ADP) and Norfolk Southern Corp. (NYSE: NSC).

The list tends to lean toward the more conservative side, and with good reason. Many investors, both large and small, have been selling market strength after the best year for the major indexes since 2013, so it makes sense to look for low volatility and stocks that pay reliable dividends.

We found five companies on the High Quality & Dividend Yield list that offer a higher degree of safety and reliable dividends. All are rated Buy at Merrill Lynch.

Emerson Electric

This has rallied nicely off the lows posted in August, but it still offers a solid entry point for investors. Emerson Electric Co. (NYSE: EMR) is a global technology and engineering company providing innovative solutions for customers in industrial, commercial and residential markets.

The company’s Automation Solutions business helps process, hybrid and discrete manufacturers maximize production, protect personnel and the environment while optimizing their energy and operating costs. The Commercial & Residential Solutions business helps ensure human comfort and health, protect food quality and safety, advance energy efficiency and create a sustainable infrastructure.

Emerson Electric shareholders receive a very reasonable 2.75% dividend. The Merrill Lynch analysts have set an $80 price target, which compares with the lower consensus figure of $75.67. The stock was last seen trading on Tuesday at $72.61 a share.

General Dynamics

This company, like other major defense prime contractors, has had a very solid year. General Dynamics Corp. (NYSE: GD) is engaged in business aviation, land and expeditionary combat vehicles and systems, armaments, munitions, shipbuilding and marine systems, and information systems and technologies.

Major products include Virginia-class nuclear-powered submarine and Ohio class replacement, Arleigh Burke-class Aegis, Abrams M1A2 tank, Stryker eight-wheeled assault vehicle, medium-caliber munitions and gun systems, tactical and strategic mission systems.

General Dynamics offers investors a 2.30% dividend. Merrill Lynch has a $218 price target on the shares, while the posted consensus estimate is $205.83. The stock closed most recently at $177.04 per share.