Investing

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

Lee Jackson

Honeywell International

This top industrial could be poised for an incredible 2020 if global growth picks up. Honeywell International Inc. (NYSE: HON) is a diversified, global technology and manufacturing company. Its operations are organized under four business groups: Aerospace, Home & Building Technologies, Safety & Productivity Solutions, and Performance Materials & Technologies.

The company is also a premier supplier of avionics, power and control systems for the aerospace industry. The analysts recently attended the company’s Honeywell Building Technologies Investor Showcase at the segment’s Atlanta headquarters, and they noted this in a recent report:

HBT has improved its revenue and margin trajectory following the October 2018 spin-out of its residential business. This is being driven by management & cultural change (four of five segment leaders have been with the company for almost 2 years; President Vimal Kapur is new to HBT, coming from Honeywell’s Process Solutions segment last year). New leaders started reinvigorating products (rising vitality indexes across sub-segments).

Investors in Honeywell are paid a 2.09% dividend. The $203 Merrill Lynch price objective is well above the $185.55 consensus across Wall Street. The stock traded at $172.55 a share on Tuesday’s close.

Texas Instruments

This old-school chip tech company offers solid value at current levels and is a great pick for more conservative investors. Texas Instruments Inc. (NASDAQ: TXN) is a broad-based supplier of semiconductor components, ranging from digital signal processors to high-performance analog components, to digital light-processing technology and calculators.

Some 65% of the company’s sales are exposed to the well-diversified, business-to-business industrial, automotive, communications infrastructure and enterprise markets. While the stock was hit hard recently as it is a big Apple supplier, the long-term outlook for this venerable leader makes it a safer bet for accounts with less risk tolerance.

The stock was crushed after posting solid third-quarter results, but guidance surprised Wall Street. The backup in the share price still offers long-term investors the best entry point since the summer.

Investors receive a 3.10% dividend. The Merrill Lynch price target for the shares is $140. The consensus target price is $126.07, and the stock last closed at $117.75.

VFC

This top consumer apparel stock could be poised for a big holiday shopping season. V.F. Corp. (NYSE: VFC) is a leading apparel wholesaler of lifestyle brands, including North Face, Vans, Wrangler, Lee, Timberland and Nautica. VFC distributes products globally via department stores, independent retailers, specialty chains and its own retail (full price, outlet and e-commerce).

Coalition segments include Outdoor and Action Sports (68% of fiscal 2018 revenue), Jeanswear (21% of revenue), and Workwear/Imagewear (9% of revenue). The company reported solid results this year and recently spun off its Kontoor Brands to pay down debt.

Shareholders receive a 2.23% dividend. Merrill Lynch has a price objective of $100, while the consensus is nearly in line at $101.43. The shares closed most recently at $85.99.

With outstanding metrics and good dividends, these quality companies make good sense for conservative growth portfolios. With solid total return potential and less probability for extreme volatility, they all are outstanding long-term portfolio additions.