Investing

The Fed May Have to Lower Rates Soon: Buy These Safe Dividend Stocks Now

Bristol-Myers Squibb

This one always remains a solid pharmaceutical stock to own. Bristol-Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.

The company reported solid fourth-quarter results, and the Merrill Lynch team noted this:

Bristol reported strong fourth quarter results (though largely ahead of Street given the recognition of Celgene revenue). We highlight the 2020 / 2021 provided guidance as the key focus for investors, as well as +$5 billion increase in share repurchase. While guidance comes in light, we expect the results to be viewed favorably by the Street and look for share strength.

Holders of Bristol-Myers Squibb stock receive a 3.02% dividend. The $75 Merrill Lynch price target compares with the $72.30 consensus target, as well as the $59.58 closing price after almost a 4% retreat on Thursday.

Target

This remains a solid and safe retail total return play, and it is another member of the Merrill Lynch US 1 stock list. 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 was hit last month after the company said sales of toys, electronics and home furnishings over the critical holiday shopping season weren’t as strong as expected, and it warned that overall growth for its fiscal fourth quarter likely will be lower than predicted.

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, and consumer staples stocks like Target tend to do well when rates are lowered.

Shareholders receive a 2.5% dividend. The Merrill Lynch price objective is a sizable $150. The much lower consensus target is $135.57, and Target stock closed most recently at $105.62, down 4.5% on the day.

Verizon

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.

Investors receive an outstanding 4.47% dividend. Merrill Lynch has a $64 price objective. The posted consensus target price is $61.61, and Verizon stock closed Thursday at $55.06, down 3.5% on the day.

The scale of the recent selling is something we haven’t seen since 2008, and it may not be over. However, investors that do have some dry powder can take advantage of lower share prices for these industry leaders, collect dependable dividends and own companies that could respond well to a lower interest rate scenario.

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