UBS Adds Oil Field Services Giant to Dividend Ruler Stocks Portfolio

While lower quality, non-dividend-paying stocks have outperformed in the S&P 500 so far this year, dividend growth strategies, like the one the UBS Dividend Ruler stock list employs, have lagged the overall market but have outperformed the highest yielding companies in the benchmark.

Here is the new addition to the UBS list, as well as the current top-yielding stocks in the portfolio, as we turn the corner toward summer.

Schlumberger

This oilfield services behemoth is added to the UBS list, and shares have rebounded smartly off the lows printed in January. Schlumberger Ltd. (NYSE: SLB) is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry worldwide. Employing approximately 115,000 people representing over 140 nationalities and working in more than 85 countries, Schlumberger provides the industry’s widest range of products and services from exploration through production.

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While the company operating income decreased 15.8% to $1.99 billion in the first quarter from $2.36 billion in the first quarter in 2014, most of the decline in operating income came from lower North American operations, as global operations remained steady. The deterioration in income and margin resulted from the poor showing in North American land activity. Depressed crude oil prices have led to 823 oil and gas rigs being idled in the United States alone since the beginning of this year.

Schlumberger investors are paid a 2.2% dividend. The UBS target price for the stock is $103. The Thomson/First Call consensus price target is $100.60. Shares closed Wednesday at $92.51.

Occidental Petroleum

This top energy stock comes in as the highest yielding stock in the Dividend Rulers portfolio. Occidental Petroleum Corp. (NYSE: OXY) announced last year that it will continue to grow dividends and expects to begin buying back more shares this year and beyond, a double plus for shareholders. Analysts feel that the company still faces the rebounding oil price correction with the strongest balance sheet in the sector, with net cash at year-end 2014 they estimate at around $1.7 billion, and a whopping $11 per share of cash available for buy backs. With chemicals and other products helping to blunt the drop in oil, Occidental is well positioned to ride out the storm.

Short sellers that had been leaning into the stock during the oil price decline have started to get out as prices have poked back through $60 a barrel, way ahead of the low $40s hit back in January.

Occidental shareholders are paid an outstanding 3.91% dividend. The UBS price target is $92, and the consensus target is at $85.43. Shares closed trading most recently at $76.17.

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Dominion Resources

This company is a top utility stock that still remains a solid buy for investors. Dominion Resources Inc. (NYSE: D) raised its dividend by 8% in February. That represents the 12th consecutive annual dividend increase. The utility has filed a petition with Virginia State Corporation Commission to build the first large-scale solar facility in that state.

The company recently reported first-quarter 2015 operating earnings of $0.99 per share, beating the Wall Street estimate of $0.96 by 3.1%. Earnings were near the upper end of the guidance range of $0.85 to $1.00. Operating earnings in the first quarter were down 4.8% from $1.04 per share in the year-ago period. The decline in earnings was due to lower merchant generation margins and a higher effective tax rate, partially offset by additional earnings from Marcellus farm-out transactions and higher revenues from growth projects.

Investors are paid a 3.65% dividend. The consensus price target is $79.44. Shares closed on Wednesday at $70.90.

Eversource

This is another top utility stock in the UBS Dividend Ruler portfolio. Eversource Energy (NYSE: ES) was formerly known to investors as Northeast Utilities. The company operates in three segments: Electric Distribution, Electric Transmission and Natural Gas Distribution. It is involved in the generation, transmission and distribution of electricity, and the distribution of natural gas. The company serves residential, commercial and industrial customers in Connecticut, Massachusetts and New Hampshire. It provides energy delivery services to approximately 3.6 million electric and natural gas customers.

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Eversource recently reported first-quarter 2015 operating earnings of $0.81 per share, beating the Wall Street consensus of $0.80. The quarterly figure also surpassed the year-ago earnings of $0.76 per share by 6.6%. The improvement was due to strong performance from its electric and natural gas delivery systems.

Eversource shareholders are paid a 3.42% dividend. The consensus price target is $52.98, and shares close the day Wednesday at $47.94.

Johnson & Johnson

This pharmaceutical conglomerate is another yield leader on the UBS list. Johnson & Johnson (NYSE: JNJ) is one the top market cap stocks in the health care sector and raised the dividend for shareholders this year for the 52nd consecutive year.

With everything from medical devices to over-the-counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street. The health care giant also has one of the most exciting pipelines of new drugs in the sector. That combined with the solid over-the-counter product business make the stock an outstanding holding.

Johnson & Johnson investors are paid a 3% dividend. The stock is rated Market Perform at UBS with a $107 target. The consensus price objective is $109.02. The stock closed Wednesday at $100.55.

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While interest rates will rise this year, the rise will be very slow and measured. Top dividend stocks will continue to be outstanding holdings in long-term growth and income portfolios.