We started the new decade on a very upbeat note, and then 2020 turned into a gruesome bad movie featuring the worst global health crisis in 100 years. While volatility has cooled down, the Chicago Board Options Exchange’s CBOE Volatility Index (VIX) has dropped to the low 30s from a stunning high in March of 85, but we are still seeing big swings in the markets.
A new massive Baird research report features the firm’s fresh ideas for stocks to buy for the balance of 2020. Given the big run off the March lows, we were intrigued by the “ideas for investors seeking safer dividends” section of the report. With many companies having cut or even eliminated paying dividends to shore up balance sheets and liquidity, this seemed like a very good group to examine.
The Baird report highlighted dividend-paying stocks in seven different sectors. We screened for top companies that have been hit hard but should bounce back nicely as the economy improves in the third and fourth quarters. All the stocks are rated Outperform at Baird. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This is a very solid play for rocky markets, offering a very reasonable entry point as shares are down 21% this year. Archer Daniels Midland Co. (NYSE: ADM) processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company operates through the following segments.
The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing and further processing of oilseeds, such as soybeans, and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed, into vegetable oils and protein meals.
The Carbohydrate Solutions segment engages in corn wet milling and dry milling activities. It also converts corn into sweeteners, starches and bioproducts. Lastly, the Nutrition segment provides customer needs for food, beverages, health and wellness, and more.
Investors receive a nice 4.15% dividend. Baird has a $41 price objective on the shares, and the Wall Street consensus figure is up at $46.75. Archer Daniels Midland stock traded at $34.20 early Wednesday.
Bank of America
This leading bank stock has been crushed, down a stunning 33% this year. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally. It operates some 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
The bank reported net income for the first quarter of 2020 of $4 billion, or $0.40 per diluted share. Revenue for the quarter came to $22.8 billion, down from $23.0 billion a year ago. With interest rates plunging, the net interest income banks typically earn has been crushed as well.
Investors receive a 3.29% dividend. The Baird price target is $27, in line with the consensus target of $27.15. Bank of America stock traded at $21.25 Wednesday morning.