Investing

UBS Adds Top New Names to Dividend Ruler List of Stocks to Buy

The stock market is beginning to show some fatigue as the dog days of summer roll along. Traditionally August and September can be treacherous months for the markets, and this year may be no exception. Investors may want to take some gains and shift assets to more conservative stocks like those found on the UBS Dividend Ruler Stock list.

Stocks are selected for the Dividend Ruler list based on both their historical track record of producing strong, consistent dividend increases, as well as continued expectations that dividends per share will grow at an attractive rate over the next several years. Here are the top new additions to the list, along with the current highest yielding names to buy.

Nordstrom Inc. (NYSE: JWN) is an upscale retailer that makes its debut on the UBS list. Over the past 10 years, the company has increased its dividends per share at an annualized rate of 18.7%, including an 11.1% dividend hike announced earlier this year. Dividend growth should continue to be robust over the next few years, driven by solid square footage expansion, a best in-class e-commerce strategy and exposure to the higher-end U.S. consumer. The UBS price target for the stock is $65. The Thomson/First Call estimate is at $63.50. Investors are paid a 2.0% dividend.

Stanley Black & Decker Inc. (NYSE: SWK) also is a new arrival to the UBS list. Stanley Black & Decker (Stanley Works acquired Black & Decker in 2010) is a global manufacturer of tools, hardware and security solutions, with roughly half of total revenues from its Construction & Do It-Yourself segment, and the remainder split between its Industrial and Security businesses. The company has paid dividends for an incredible 137 years and increased the dividend in each of the past 46 years. The UBS price target for this solid American consumer stock is $92.50, and the consensus price target is $88. Stockholders are paid a 2.3% dividend.

Intel Corp. (NASDAQ: INTC) slowly but surely is morphing from tech giant to value stock. Despite its efforts to move away from PC reliance, the transition has been slow, and the move to designing chips for smartphone and tablets has been time consuming. UBS has a $25 price target for the stock, and the consensus target is $23. Intel pays investors an outstanding 4.0% dividend.

Northeast Utilities (NYSE: NU) operates New England’s largest utility, with service to more than 3.5 million customers in Connecticut, Massachusetts and New Hampshire. The UBS price target for this tried and true utility is $45, and the consensus target is $48. Shareholders are paid a 3.4% dividend.

Clorox Co. (NYSE: CLX) is a name that may sound boring, but the stock pays a solid dividend and has a very low beta of 0.4. Carl Icahn made some activist noise a few years ago but abandoned his efforts last year and the stock has performed well. The UBS price target is $90, while the consensus price objective is $86. Investors are paid a 3.3% dividend.

Occidental Petroleum Corp. (NYSE: OXY) may be one of the most undervalued stocks trading today. Occidental operates via three segments. Its oil and gas segment explores and develops oil, natural gas and natural gas liquids (NGLs). The chemical segment (OxyChem) manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports and stores oil, NGLs and natural gas. UBS has a $98 price target, and the consensus figure is at $106. Investors are paid a 2.9% dividend.

Johnson & Johnson (NYSE: JNJ) combines the best of all things health care related. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. This diversity helps to support earnings if there is a weak quarter in any specific category. UBS has a $95 price objective, while the consensus target is at $95 as well. Shareholders are paid a 2.9% dividend.

United Parcel Service Inc. (NYSE: UPS) may have some near-term stock weakness as the company had a plane crash near Birmingham, Ala., on Wednesday. That aside, growing global economic strength should help to continue to support solid earnings. UBS has a $94 price target, the same as the consensus number. Investors are paid a 2.8% dividend.

So far this year, the current constituents of the Dividend Ruler Stocks list largely have lived up to this billing. Of the 28 stocks currently on the list, 23 have announced dividend hikes thus far in 2013. While the stocks may seem conservative, they are far less likely to get destroyed in any severe market correction as some of the hot momentum stocks may. That may help investors sleep a little better at night.

 

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