4 Top Blue Chip Dividend Tech Giants to Buy# Stock
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4 Top Merrill Lynch Blue Chip Dividend Tech Giants to Buy for 2016
December 4, 2015 by 247lee
Intel processor
Source: courtesy of Intel Corp.
One of the surprises of 2016 was how poorly some dividend and dividend
growth stocks did in 2015. Many on Wall Street point to the headline weight
of the Federal Reserve interest rate lift-off as one catalyst for the poor
performance. With a 75% probability that the Fed raises rates this month
baked in, dividend-paying technology stocks make good sense for 2016.
We scanned the Merrill Lynch research universe for mega-cap technology
stocks that pay dividends. We found four outstanding companies that all pay
a dividends higher than the 10-year U.S. Treasury bond, and are all rated
Buy at Merrill Lynch.
Intel
This top chip company has traded sideways all year, and the recent very
positive earnings report certainly has helped to lift the pall hanging over
the company. Intel Corp. (NASDAQ: INTC) is regarded as having among the
highest shareholder cash returns at approximately 8%, but it has lagged high
-growth specialty chip stocks. The iconic chip giant had a stellar 2014 on
the tailwinds from continued PC and notebook sales, but this year has been a
far different story. The stock has just traded back to where it began 2015.
Intel purchased chip rival Altera for a massive $16.8 billion. Some on Wall
Street view the deal pessimistically, citing its high cost, aggressive
growth assumptions on the part of Intel and the increase in debt. Others
feel the addition will help Intel start to move away from the PC and laptop
dependence. Intel’s pending acquisition of Altera would put it into the
traditional fabless market of programmable logic devices, but ultimately by
2020 50% of Altera’s product line could be manufactured at Intel facilities.
ALSO READ: The Best and Worst Run States in America: A Survey of All 50
Intel’s NAND flash memory business has a strong focus on enterprise
opportunities. Many on Wall Street who think that the company’s new chip,
which is a collaboration with Micron Technology called the 3D XPoint, could
be primarily In-Memory compute in servers and its launch should coincide
with Intel’s Purley platform server launch in 2016.
Intel investors receive a solid 2.82% dividend. The Merrill Lynch recently
raised its price target to $40. The Thomson/First Call consensus target is $
35.92. Shares closed Thursday at $34.04.
Cisco
This is one of the top mega-cap tech stock picks on Wall Street and perhaps
a surprising defensive pick for volatile markets like we have witnessed.
Cisco Systems Inc. (NASDAQ: CSCO) posted disappointing earnings in November,
and many on Wall Street have lowered their price targets for the networking
giant significantly. Cisco is also one of the 24/7 Wall St. top 10 stocks
to own for the next decade.
Sponsored by BMC Software
Cisco earlier this year won an important contract for the Verizon build-out
of the company’s next-generation 100G metro network. While Cisco’s optical
business is small as a part of total revenue, this win is seen by Wall
Street as a significant endorsement of the investments Cisco has made into
its optics business.
Analysts across Wall Street point to an estimated double-digit bookings
momentum for 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. A jump from 40 GE to
100 GE data center switching and next generation security are also adding to
the total sales profile and product mix.
Cisco investors receive a very solid 3.12% dividend. The Merrill Lynch price
target is $30, and the consensus target is $30.36. The shares closed most
recently at $26.95.
Microsoft
This top technology stock should not only do fine in the coming rising rate
environment, but it gives investors a large degree of mega-cap tech safety.
Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of
support from portfolio managers, who have been adding the software giant to
their holdings at an increasingly faster pace all of this year.
Numerous analysts feel that Microsoft has become a clear number two in the
public or hyper-scale cloud infrastructure market with its Azure offering.
Some have flagged Azure as a solid rival to Amazon’s AWS service, and some
maintain that Microsoft is discounting Azure for large enterprises such that
Azure may be cheaper than AWS for larger users. The top analysts believe
the company continues to make steady progress with its cloud transition and
expect Office 365 and Azure to be solid contributors to top and bottom lines
for the next several years. While not likely to snag the top slot from
Amazon, it could add huge incremental revenue for years to come.
With gaming revenues growing at a huge pace, the Xbox continues to gain ever
more fans as the ultimate console to own. The company continues to upgrade
the popular device, and many think that it could dominate Sony’s
PlayStation down the road.
Microsoft investors receive a very solid 2.66% dividend, and the forward
valuation still remains very compelling. The $56.16 consensus price target
is much lower than Merrill Lynch’s $63. The stock closed Thursday at $54.20.
ALSO READ: 100 Largest Private Companies
Qualcomm
This top technology stock has totally underperformed this year but it is a
member of the Merrill Lynch US 1 list. Qualcomm Inc. (NASDAQ: QCOM) is still
a Wall Street favorite, and many are sticking to their guns, basically
saying that trading at current levels, 12.6 times estimated 2016 earnings,
it may be a tremendous long-term value. Qualcomm is a quality tech company
with recurring royalty revenue and a strong footprint, so patient investors
may fare very well.
Qualcomm is reported to be losing chip business, and activist investor Jana
Partners has been pressuring the company to spin off that business for some
time. Jana also wants Qualcomm to continue to cut costs, accelerate a share
buyback, improve disclosures and refresh its board, which it accomplished
when two new directors were added last summer. Jana is listed as one of the
company’s largest shareholders, with a reported $2 billion stake.
The growth of 3G mobile technologies in emerging markets, like China and
India, has positively affected Qualcomm and could be a difference maker
going forward. Qualcomm is and has been for years a market leader in the
development of 3G CDMA (Code Division Multiple Access) technologies. The
company recently developed an LTE chipset that supports SCDMA (Synchronous
Code Division Multiple Access) technology. China’s mobile network runs on
this, and it could provide the company with a huge leg up in years to come.
The company signed a big licensing deal recently in China that gave the
stock a boost this week.
Investors receive a 3.75% dividend. Merrill Lynch has a mammoth $75 price
target, and the consensus target is $64.15. Shares closed Thursday at $51.40.
The best of both worlds for aggressive growth accounts is mega-cap
technology safety combined with regular and rising dividends. This makes for
the perfect total return play for investors with a bigger appetite for risk.
December 4, 2015 by 247lee
Intel processor
Source: courtesy of Intel Corp.
One of the surprises of 2016 was how poorly some dividend and dividend
growth stocks did in 2015. Many on Wall Street point to the headline weight
of the Federal Reserve interest rate lift-off as one catalyst for the poor
performance. With a 75% probability that the Fed raises rates this month
baked in, dividend-paying technology stocks make good sense for 2016.
We scanned the Merrill Lynch research universe for mega-cap technology
stocks that pay dividends. We found four outstanding companies that all pay
a dividends higher than the 10-year U.S. Treasury bond, and are all rated
Buy at Merrill Lynch.
Intel
This top chip company has traded sideways all year, and the recent very
positive earnings report certainly has helped to lift the pall hanging over
the company. Intel Corp. (NASDAQ: INTC) is regarded as having among the
highest shareholder cash returns at approximately 8%, but it has lagged high
-growth specialty chip stocks. The iconic chip giant had a stellar 2014 on
the tailwinds from continued PC and notebook sales, but this year has been a
far different story. The stock has just traded back to where it began 2015.
Intel purchased chip rival Altera for a massive $16.8 billion. Some on Wall
Street view the deal pessimistically, citing its high cost, aggressive
growth assumptions on the part of Intel and the increase in debt. Others
feel the addition will help Intel start to move away from the PC and laptop
dependence. Intel’s pending acquisition of Altera would put it into the
traditional fabless market of programmable logic devices, but ultimately by
2020 50% of Altera’s product line could be manufactured at Intel facilities.
ALSO READ: The Best and Worst Run States in America: A Survey of All 50
Intel’s NAND flash memory business has a strong focus on enterprise
opportunities. Many on Wall Street who think that the company’s new chip,
which is a collaboration with Micron Technology called the 3D XPoint, could
be primarily In-Memory compute in servers and its launch should coincide
with Intel’s Purley platform server launch in 2016.
Intel investors receive a solid 2.82% dividend. The Merrill Lynch recently
raised its price target to $40. The Thomson/First Call consensus target is $
35.92. Shares closed Thursday at $34.04.
Cisco
This is one of the top mega-cap tech stock picks on Wall Street and perhaps
a surprising defensive pick for volatile markets like we have witnessed.
Cisco Systems Inc. (NASDAQ: CSCO) posted disappointing earnings in November,
and many on Wall Street have lowered their price targets for the networking
giant significantly. Cisco is also one of the 24/7 Wall St. top 10 stocks
to own for the next decade.
Sponsored by BMC Software
Cisco earlier this year won an important contract for the Verizon build-out
of the company’s next-generation 100G metro network. While Cisco’s optical
business is small as a part of total revenue, this win is seen by Wall
Street as a significant endorsement of the investments Cisco has made into
its optics business.
Analysts across Wall Street point to an estimated double-digit bookings
momentum for 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. A jump from 40 GE to
100 GE data center switching and next generation security are also adding to
the total sales profile and product mix.
Cisco investors receive a very solid 3.12% dividend. The Merrill Lynch price
target is $30, and the consensus target is $30.36. The shares closed most
recently at $26.95.
Microsoft
This top technology stock should not only do fine in the coming rising rate
environment, but it gives investors a large degree of mega-cap tech safety.
Microsoft Inc. (NASDAQ: MSFT) continues to find an increasing amount of
support from portfolio managers, who have been adding the software giant to
their holdings at an increasingly faster pace all of this year.
Numerous analysts feel that Microsoft has become a clear number two in the
public or hyper-scale cloud infrastructure market with its Azure offering.
Some have flagged Azure as a solid rival to Amazon’s AWS service, and some
maintain that Microsoft is discounting Azure for large enterprises such that
Azure may be cheaper than AWS for larger users. The top analysts believe
the company continues to make steady progress with its cloud transition and
expect Office 365 and Azure to be solid contributors to top and bottom lines
for the next several years. While not likely to snag the top slot from
Amazon, it could add huge incremental revenue for years to come.
With gaming revenues growing at a huge pace, the Xbox continues to gain ever
more fans as the ultimate console to own. The company continues to upgrade
the popular device, and many think that it could dominate Sony’s
PlayStation down the road.
Microsoft investors receive a very solid 2.66% dividend, and the forward
valuation still remains very compelling. The $56.16 consensus price target
is much lower than Merrill Lynch’s $63. The stock closed Thursday at $54.20.
ALSO READ: 100 Largest Private Companies
Qualcomm
This top technology stock has totally underperformed this year but it is a
member of the Merrill Lynch US 1 list. Qualcomm Inc. (NASDAQ: QCOM) is still
a Wall Street favorite, and many are sticking to their guns, basically
saying that trading at current levels, 12.6 times estimated 2016 earnings,
it may be a tremendous long-term value. Qualcomm is a quality tech company
with recurring royalty revenue and a strong footprint, so patient investors
may fare very well.
Qualcomm is reported to be losing chip business, and activist investor Jana
Partners has been pressuring the company to spin off that business for some
time. Jana also wants Qualcomm to continue to cut costs, accelerate a share
buyback, improve disclosures and refresh its board, which it accomplished
when two new directors were added last summer. Jana is listed as one of the
company’s largest shareholders, with a reported $2 billion stake.
The growth of 3G mobile technologies in emerging markets, like China and
India, has positively affected Qualcomm and could be a difference maker
going forward. Qualcomm is and has been for years a market leader in the
development of 3G CDMA (Code Division Multiple Access) technologies. The
company recently developed an LTE chipset that supports SCDMA (Synchronous
Code Division Multiple Access) technology. China’s mobile network runs on
this, and it could provide the company with a huge leg up in years to come.
The company signed a big licensing deal recently in China that gave the
stock a boost this week.
Investors receive a 3.75% dividend. Merrill Lynch has a mammoth $75 price
target, and the consensus target is $64.15. Shares closed Thursday at $51.40.
The best of both worlds for aggressive growth accounts is mega-cap
technology safety combined with regular and rising dividends. This makes for
the perfect total return play for investors with a bigger appetite for risk.