Happy spring indeed! After a brutal week for investors, with the S&P 500 plowing through the 2018 lows, and then bouncing back, there is at least a hint that maybe some of the selling may be over. Thursday’s trading action brought a much-needed rally in oil, as well as the sense that some of the bigger Wall Street players are starting to buy. The coronavirus continues to spread, but numerous positive reports suggest that the procedures put into place are starting to help, and while clearly far from over, the actual worst may be behind us.
In just a month, all the market gains that occurred during the Trump administration are gone, and investors that held onto their portfolios are looking at staggering paper losses, and those who sold are contemplating what to do next, especially income investors. With interest rates above the panic lows but still at generational lows, those looking for income from stocks may be in the best place in a while. High-yielding, safer blue chips are available at rock bottom prices, so we decided to look through the Merrill Lynch research database for stocks rated Buy that are paying big, safe dividends. We found five that investors can start to nibble at now.
This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.
While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.
News reports indicate that AT&T is in discussions with banks for a new term loan of roughly $3 billion as part of an effort to explore financing options and help the company navigate rising costs in the market. The phone and media giant has been selling off parts of its business, chunks of real estate, receivables and preferred stock to help reduce the large debt and fund 5G network expansion, stock buybacks and dividends. One would think buybacks would be shelved now to preserve cash.
Investors receive a significant 6.67% dividend. Merrill Lynch has a $43 price target for the shares, while the Wall Street consensus target is $39.43. AT&T stock closed down over 5% on Thursday at $31.15.
This remains a solid pharmaceutical stock to own and a safe play for growth and income accounts. 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 last week, and Merrill Lynch noted this:
Bristol reported strong 4Q 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.
Shareholders receive a 3.70% dividend. The Merrill Lynch price target is $75, and the consensus target is $72.30. Bristol-Myers stock closed on Thursday at $48.79, down almost 3% on the day.
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