Investing

Despite Massive Market Melt-Up, 4 Buy-Rated Stocks With Huge Dividends Are Still Cheap

BofA Securities is positive on the future for the venerable tech giant and noted this last month:

IBM presented the company’s roadmap post the Kyndryl spinoff. Mid single digit revenue growth and high single cash flow growth. The company expects to generate $35 billion in free-cash-flow over the next three years and along with debt have access to $40 billion of liquidity. We expect the valuation multiple to rerate higher post spin with increased growth, recurring revenues and better margins.


IBM stock investors receive a 5.31% dividend. The BofA Securities price target is $172, and the consensus target is just $149.45. Friday’s closing price was $123.61 per share.

MPLX

This is the top holding for the Alerian MLP energy exchange-traded fund. MPLX L.P. (NYSE: MPLX) is primarily engaged in crude oil and refined products transportation and terminaling in the U.S. Midwest and Gulf Coast regions, as well as natural gas gathering and processing in the northeast from its prior acquisition of MarkWest Energy in 2015. MPLX was formed by independent U.S. refiner Marathon Petroleum.

MPLX is one of the bigger pipeline entities, with a market capitalization of nearly $30 billion, and the company repurchased a strong $155 million in units during the second quarter. The partnership currently has approximately $657 million remaining under its board authorization and that kind of buying by management tends to keep a bid under the stock price.

Investors receive a 9.04% distribution. The $34 Barclays price target compares with the $33.06 consensus for MPLX stock, and Friday’s close at $31.18.

ONEOK

The solid price of natural gas over the past year has helped to lift this top energy company. ONEOK Inc. (NYSE: OKE) primarily engages in natural gas transportation, storage and natural gas and natural gas liquids (NGLs) gathering, processing and fractionation in the Bakken, Mid-Continent and Permian. The company recently closed the roll-up of its underlying master limited partnership, ONEOK Partners.

The company has a strong presence in the Oklahoma SCOOP/STACK (NGL gathering/takeaway system, G&P), the Williston Basin (G&P, NGL takeaway) and the Permian Basin (NGL gathering, NGL takeaway, natural gas takeaway), which analysts feel provides high-return growth opportunities.

Many on Wall Street remain very positive on the company’s primarily fee-based earnings, which account for 90% of total earnings.

Investors receive a 5.78% dividend. Wells Fargo has set a $72 price target. That is well above the consensus target of $52.47. ONEOK stock closed at $64.72 a share on Friday.


These four outstanding blue chip stocks are offering growth and income investors solid entry points and come with big and, most importantly, reliable dividends. It is very possible that the overall market could see some profit-taking after the big moves over the past couple of weeks, so buying partial positions now may be the best idea.

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