This remains a top Wall Street energy pick, and it is a safer long-term play for conservative investors. 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.
Exxon 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. Note that Exxon has one of the highest paid American CEOs.
The company reported better third-quarter results that did have some positive trends, and Merrill Lynch noted this at the time.
ExxonMobil’s third quarter is underlined by momentum towards a target to double cash-flow by 2025 with visible growth in exploration and production leading the way. Project execution remains strong while peer leading balance sheet allows for countercyclical investment at advantaged costs. With asset sales set to close any deficit in cash-flow, the company’s strategy clears the way for future rateable dividend growth.
Fourth-quarter results are expected on January 31.
The company raised the dividend last year by a nickel per share to $0.87, which now translates to a solid 5.08% dividend. The $100 Merrill Lynch price objective is well above the $78.24 consensus estimate. The stock closed at $68.56 on Friday.
This blue chip giant still offers investors a very solid entry point. International Business Machines Corp. (NYSE: IBM) is a leading provider of enterprise solutions, offering a broad portfolio of information technology (IT) hardware, business and IT services, and a full suite of software solutions. The company integrates its hardware products with its software and services offerings in order to provide high-value solutions.
IBM’s five major segments are: 1) Cognitive Solutions, 2) Global Business Services, 3) Technology Services & Cloud Platforms, 4) Systems and 5) Global Financing. Analysts cite the company’s potential in the public cloud as a reason for their positive outlook going forward. But note that IBM is among the big corporations with the most debt.
IBM offers shareholders a large 4.70% dividend. The Merrill Lynch price target is $170. The posted consensus target is $147.68, and the shares were last seen trading at $138.31 apiece.
This top telecommunications stock offers tremendous value and growth potential. Verizon Communications Inc. (NYSE: VZ) is one of the largest U.S. telecom companies. It provides wireless and wireline service to retail, enterprise and wholesale customers.
The company’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition. Verizon acquired AOL and Yahoo to create the Oath digital content platform.
Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide. Furthermore, Verizon is another of the most valuable brands in the world.
Verizon investors receive an outstanding 4.09% dividend. Merrill Lynch has a $64 price objective. The consensus price target across Wall Street is $61.61, while the stock closed trading most recently at $60.13.
Note that while these companies are not necessarily the most conservative plays, they are trading at reasonable valuations and would quite possibly hold up much better in a risk-off scenario in which momentum stocks are the first to be sold. Investors could also sell covered calls out two to three months to increase total return potential.