With the year and the decade coming to a close, many of the top companies we follow on Wall Street are making some changes to the lists of their high-conviction stock picks for clients. With the market showing strength not seen in years, it makes sense to examine the lists and consider some changes, as 2020 could have increased volatility as the political and geopolitical cycles could once again prove to be very explosive components.
In a recent research note, the analysts at Merrill Lynch make a big move by adding Baker Hughes Co. (NYSE: BKR) to the firm’s well-respected US 1 list of stocks to Buy. This is big as energy and oilfield services stocks have suffered this year, while all the major indexes have delivered 20% returns.
Baker Hughes is an international industrial service company and one of the world’s largest oil field services companies. It provides the oil and gas industry with products and services for oil drilling, formation evaluation, completion, production and reservoir consulting.
General Electric recently gave up majority control of the company. While selling shares in the oil-field services firm raised about $3 billion cash, it also triggered a more than $7 billion accounting charge.
Shareholders in Baker Hughes receive a very solid 3.17% dividend. The Merrill Lynch price target for the shares is $29, and the Wall Street consensus target was last seen at $28.62. Shares closed Wednesday’s trading at $22.68 apiece.
We screened the rest of the Merrill Lynch US 1 list looking for top picks that pay solid and dependable dividends and found four good growth and income ideas. With another year of low interest rates in the outlook for 2020, total return stocks may be the best bet for investors.
Many on Wall Street love this firm’s growth potential near term and especially long term. BlackRock Inc. (NYSE: BLK) is the largest asset manager in the world, with more than $5 trillion in assets under management. Its acquisitions of Merrill Lynch Investment Management and iShares transformed it from a fixed income manager into a multiproduct and multichannel giant, with roughly 40% of its assets under management overseas. It has leading franchises in exchange-traded funds (ETFs), institutional fixed income, alternatives and cash. It also operates Solutions, a leader in risk analytics.
The company’s strong historical and prospective dividend growth is underpinned by the high-quality and diversified business model. Dividends have increased 18% annually over the past 10 years. Dividend growth likely will moderate but remains solid in the low teens, consistent with expectations for earnings growth in the years ahead.
Shareholders receive a 2.67% dividend. Merrill Lynch has a $520 price objective, and the consensus target is right in line at $519.80. Shares closed at $493.91 on Wednesday.
This company continues to be a huge player in the fiber optic world. Corning Inc. (NYSE: GLW) is a technology pioneer that manufactures LCD glass for flat-panel displays. Telecommunications (30% of sales) produces optical fiber and cable, component hardware and equipment, and photonic components for the telecommunications, CATV and networking industry.
In addition, the company’s Environmental Technologies division (12% of sales) produces specialized glass, glass ceramic and polymer-based products for the automotive industry.
Corning offers shareholders a 2.86% dividend. The $34 Merrill Lynch price target compares to the $31.47 consensus target and the most recent close at $28.02.