Investing

Merrill Lynch Makes Huge Contrarian Addition to US 1 Top Picks List

BlackRock’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.

BlackRock shareholders are paid a 2.46% dividend. The stunning $590 Merrill Lynch price objective compares with a slightly higher consensus price target of $592.29. Shares closed at $536.86 on Wednesday.

Raytheon

This company has a diversified mix of businesses and remains a defense and aerospace favorite at Merrill Lynch. Raytheon Co. (NYSE: RTN) is an industry leader in defense, government electronics, space, information technology and technical services. The company operates in four principal business segments: Integrated Defense Systems, Intelligence, Information and Services, Missile Systems, and Space and Airborne Systems. It is among the companies that make the most from the U.S. government.

With a history of innovation spanning 97 years, Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries.

On June 9, 2019, United Technologies and Raytheon agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies have received unanimous approval from their respective boards. The new company will be called Raytheon Technologies.

Shareholders in Raytheon receive a 1.64% dividend. The Merrill Lynch price objective is $265. The consensus target price is $234, and the shares ended Wednesday’s trading at $229.41.

Target

This remains a solid and safe retail total return play, but it was hit hard after posting disappointing holiday sales results. 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.

The stock stumbled last week after the company said sales of toys, electronics and home furnishings over the critical holiday shopping season weren’t as strong as expected, with sales up 1.4% between November 1 and December 31 in stores and through its digital channels. Target warned that overall growth for its fiscal fourth quarter, which includes January, likely will come in at less than half the 3% to 4% growth it had expected.

Since 2017, Target has poured tons of money into its e-commerce offerings, overhauling its stores and refreshing its inventory to compete better against Amazon. The recent pullback offers investors a solid entry point after the stock had run.

Target offers shareholders a 2.10% dividend. Merrill Lynch has set a $150 price objective. The consensus target is $135.57, and the stock closed most recently at $113.90 per share.

One brand new addition to the respected Merrill Lynch U.S. 1 list and four additional ideas to that list that offer solid growth and dependable dividends. Given the big market moves, it may be wise to buy partial positions and see if late January or February doesn’t bring a small pullback.