It seems as though the election cycle has gone on forever, because it has, and today finally the election will be held. While both sides feel their candidate will be the best, we probably end up with a divided Washington, which usually means gridlock, and given the past eight years, they may not be all that bad.
We get the sense the various Wall Street strategists we cover think that the best way for investors to be situated in 2017 is in very large cap stocks that pay solid dividends. We screened our 24/7 Wall St. research database and found that many analyst remain bullish on mega-cap dividend paying technology stocks. These five, all are rated Buy, could continue to thrive in 2017.
This semiconductor capital equipment leader has moved up nicely this year after underperforming. Applied Materials Inc. (NASDAQ: AMAT) is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Applied Material’s technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.
The analysts are very positive on the stock and see Applied Materials benefiting not only the semiconductor side of the business, but also from larger, higher resolution and flexible screens on the display side of the business. Despite reporting solid first-quarter earnings that were above consensus, and guidance that was in line with expectations, the stock is still very reasonably priced. It may very well be one of the best technology values available for investors today. Some Wall Street analysts see continued FinFET capacity expansion (10nm/14nm/16nm) and transition to 3D NAND, with DRAM spending remaining strong next year.
Earlier this year the company announced a new $2 billion share buyback program, which comes on the heels of a recently completed $3 billion program. Merrill Lynch sees the purchase plan as being approximately 8% accretive to earnings.
Shareholders receive a 1.4% dividend. The Merrill Lynch price target for the stock is $35. The Wall Street consensus target is $33.50. Shares closed Monday at $29.66.
This is one of the top mega-cap technology stock picks on Wall Street. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells Internet Protocol (IP) based networking products and services related to the communications and information technology industry worldwide. It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco offers service provider video infrastructure, including set-top boxes, cable/telecommunications access products, and cable modems, as well as video software and solutions. In addition, it provides collaboration products comprising unified communications products, conferencing products, telepresence systems and enterprise mobile messaging products; data center products, such as blade, rack and modular servers, fabric interconnects, software and server access virtualization solutions; security products, including network and data center security, advanced threat protection, web and email security, access and policy, unified threat management, and advisory, integration, and managed services; and other products, such as emerging technologies and other networking products.
UBS analysts recently met with the company CFO, Kelly Kramer, who came over from General Electric. They noted these positives in a recent report:
Interesting tidbits from our discussion included (1) Ms. Kramer said Cisco has no interest in buying Nokia and played down the likelihood of a large acquisition, (2) there is a good chance for repatriation legislation in 2018; Kramer would like to do more than offset dilution with the buyback program, (3) Cisco is co-developing a router with one of the hyperscalers—Cisco owns the IP and it will become a core router offering, and (4) each business unit is examining how to “Meraki-ize” in order to create more recurring revenue though the shift will be gradual.
The last part refers to Cisco’s Meraki Cloud Services. Many think that Meraki is likely to be a $1 billion plus run-rate business this year, with an incredible 50% to 70% compounded annual growth rate.
Cisco investors receive a 3.36% dividend. UBS has a $35 price target, and the consensus target is $33.30. Shares closed yesterday at $30.94.