UBS Adds Warren Buffett Blue Chip Favorite to Dividend Rulers Portfolio

As we approach the end of the year, most of the big Wall Street firms that we cover are fine-tuning their top portfolios and getting them ready for next year. With 2015 looking like a flat to down year for almost all the major indexes, barring a major rally in the final two holiday-shortened trading weeks, portfolio managers are working hard to get a winning plan in place for 2016.

In a recent report, UBS analysts on the Dividend Rulers portfolio made some major changes, adding a top U.S. blue chip and removing a European stock. The portfolio struggled this year not because of the content, but due to dividend stocks being generally out of favor. The Federal Reserve finally lifted rates some, which actually could help the overall sentiment for dividend stocks.

Here we report on the changes to the portfolio and also profile the three top-yielding positions currently held.

Coca-Cola Co. (NYSE: KO) is a huge Warren Buffet holding, and it was added back to the portfolio after a year’s absence. The company is the world’s biggest brand and largest manufacturer of soft-drink concentrate and syrups. It enjoys a 50% share of the world’s carbonated soft drink market and 44% share of the U.S. market.

The UBS team cited currency concerns a year ago when it was removed the stock, and it has essentially traded sideways since. With earnings suspected to have troughed, and the dividend raised 9% over the past year, Coke shares are again a part of the Dividend Ruler holdings.

Investors are paid a solid 3.09% dividend. The Thomson/First Call price target for the stock is $45.28. Shares closed most recently at $43.29.

British American Tobacco PLC (NYSE: BTI) was removed from the list, and the reason cited is the firm has discontinued coverage of the stock in an effort to deploy resources elsewhere. The shares closed Tuesday at $109.51.
[recirclink id=305327]
Here are the three top-yielding dividend stocks currently in the Dividend Rulers portfolio.

Dominion Resources

Many of the Wall Street firms that we cover are becoming more positive on utilities again after this year’s underperformance. Dominion Resources Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems, with 928 billion cubic feet of storage capacity, and it serves utility and retail energy customers in 13 states.

Dominion operates via three divisions. Dominion Virginia Power is focused on regulated electric transmission and distribution that serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. Dominion Generation generates electricity through coal, nuclear, gas, oil, hydro and renewable sources. Dominion Energy centers on regulated natural gas distribution and storage.

Dominion investors receive a solid 3.9% dividend, which was just raised yet again over 8%. The consensus price target is $79.17. The stock closed Tuesday at $67.14.
Invesco

This company is a financial services leader that has strong positions in both equity exchange traded funds (ETFs) and actively managed equity and debt mutual funds. Invesco Ltd. (NYSE: IVZ) looks to be very well-positioned to capitalize on inflows into both segments, as well as higher asset prices, as many on Wall Street see a continuation of the six-year bull market.

Invesco PowerShares is the boutique investment management firm that manages a family of ETFs. The company has been part of Invesco, which markets the PowerShares product, since 2006. The incredible growth and popularity of the product is why many on Wall Street remain so bullish on the stock.

Many analysts see the company as one that is best positioned to compete for share, given its mix of product offerings and attractive relative performance.

Invesco investors receive a 3.4% dividend. The consensus price target is $40.76. The shares closed Tuesday at $31.73.

Occidental Petroleum

This top energy stock is one of the higher yielding domestic stocks in the energy sector. Occidental Petroleum Corp. (NYSE: OXY) is an international oil and gas exploration and production company with operations in the United States, Middle East and Latin America. It is one of the largest U.S. oil and gas companies, based on equity market capitalization. Its midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. In addition, the wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.

The company posted surprising third-quarter numbers that beat analyst expectations, and it also announced that it would be leaving the Bakken shale after posting very heavy losses there. Occidental also announced recently a deal with Ecopetrol to invest up to $2 billion over the next decade to increase production at the La Cira-Infantas oil field in Colombia. According to Reuters, the new round of investments will increase production in the region by more than 200 million barrels.

Occidental shareholders are paid an outstanding 4.48% dividend. The consensus target is $79.92, and the stock closed on Tuesday at $66.98.
[recirclink id=305358]
The most important aspect for many growth and income investors is the quality of the dividend. The Dividend Rulers portfolio is chock full of companies that have paid and raised dividend for years and are not likely to change that going forward.