Investing

5 Dividend Paying Stocks Deutsche Bank Likes If Trump Wins in November

Lee Jackson

Published: September 20, 2016 9:50 am

Last Updated: January 13, 2020 3:22 am

The good news for all of us is that in about seven weeks the political cycle will be over, at least as far as the presidential election is concerned, and we can concentrate more on other fall activities. While the polls have the race pretty tight, one thing is for sure: a victory by Donald Trump would favor a far different group of stocks than a victory by Hillary Clinton.

A new Deutsche Bank research report makes the case that certain outcomes of the election could ratchet up the volatility big-time. For years Wall Street has always seemed to be happiest when power was split to some degree, and there was an element of gridlock. Either way, if Trump is the winner, certain sectors should do better than others and vice versa.

The Deutsche Bank team has a 15 stock basket for a Trump victory, but we picked five that we think may do okay either way, and they all pay dividends.

Comcast

This is a broadcasting-related stock that could have big upside potential. Comcast Corp. (NYSE: CMCSA) is one of the nation’s largest video, high-speed internet and phone provider to residential customers under the XFINITY brand and also provides these services to businesses. Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings.

Comcast has consistently been growing earnings substantially with extremely strong content revenue growth. Increased revenue at NBC Universal is also giving the company some earnings tailwinds, and a growing sports lineup is adding to revenues.

Some top Wall Street analysts see cable giants like Comcast as a top growth story that still has plenty of room to run, as well as generating solid earnings to support continued stock buybacks.

Comcast investors receive a 1.67% dividend. The Wall Street consensus price objective is $75.37. Comcast closed trading on Monday at $65.83.

Dow Chemical

This large cap leader makes sense in all markets. Dow Chemical Co. (NYSE: DOW) is a market-driven integrated, with an industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses. It delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high-growth sectors such as packaging, electronics, water, coatings and agriculture.

With an improving economy domestically, and emerging markets bottoming, the growth potential for a company like Dow Chemical with multiple revenues and product silos is outstanding. Last year, Dow had annual sales of more than $58 billion and employed approximately 53,000 people worldwide.

Last December the company announced a huge merger with DuPont. It is planning to combine into a company valued at about $120 billion, which will then split off into three separate companies, one focused on materials, one on agriculture and one on nutrition and electronics specialty products. Many on Wall Street think that the merger offers a very solid investment for the future, and the sum-of-the-parts total may be far greater than the current value of the stock.

Investors receive an outstanding 3.53% dividend. The consensus price target is $60.25. The stock closed Monday at $53.06.

Pfizer

This top pharmaceutical stock made a gigantic splash earlier this year with a $5.5 billion purchase of Anacor Pharmaceuticals. Pfizer Inc. (NYSE: PFE) has a very strong pipeline, and being the world’s largest drug manufacturer by sales value supports the Wall Street notion that the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years.

The company continued its acquisition plans when it announced last month another gigantic purchase, acquiring Medivation, a biotech focusing on oncology drugs for a stunning $14 billion. Medivation’s drug, Xtandi, already generates about $2 billion in yearly sales and has the potential to more than double, according to analysts. Pfizer said the deal would add five cents to earnings in the first full year after closing and isn’t expected to affect its 2016 financial guidance. Pfizer said it plans to finance the transaction with its cash holdings.

Pfizer has announced that it is starting 20 clinical trials this year, and more soon after, on treatments to conquer cancer, as it also seeks to gain leadership in one of the hottest and most lucrative areas of medicine. Hedge funds seem to like the stock as 22 own it now.

Pfizer investors receive a 3.55% dividend. The consensus price target is $39.53. Pfizer closed Monday at $33.65.

Verizon Communications

This top telecommunications company has backed up some and is offering a nice entry point. Verizon Communications Inc. (NYSE: VZ) is a global leader in delivering the digital world. Verizon Wireless operates America’s self-described most reliable wireless network, with 109.5 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and it delivers integrated business solutions to customers worldwide.

The company reported solid second-quarter earnings; however, revenues came in short of Wall Street expectations. The analysts note that management kept guidance in line with expectations, excluding the impact of the strike-related work stoppage.

Verizon also announced back in the summer the purchase of Yahoo’s core operating business for $4.8 billion in cash. The analysts feel it plays into Verizon’s strategic drive to expand into advertising and content, and they also think the transaction is largely immaterial from a financial perspective.

Verizon investors receive a 4.52% dividend. The consensus price objective is $54.09. Shares closed Monday at $51.41.

Wells Fargo

This large cap bank is another stock for investors to look at now for safety, dividends and solid upside potential. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The stock also remains a top Warren Buffett holding, and he raised his holdings in the bank to 10% on the stock’s weakness earlier this year.

The company reported inline results and earnings revisions, which didn’t go over well after the other major banks posted big earnings. Wells Fargo also had a recent public relations headache as it was revealed that employees allegedly opened up client accounts that were not approved. The dip in the shares due to the bad publicity could be a solid purchase level for long-term investors.

Shareholders are paid a 3.3% dividend. The consensus price target is $53. Shares closed Monday at $46.54.

Staying with large cap, low-P/E, dividend-paying companies makes good sense for now, and regardless of who wins, probably will remain the stocks that Wall Street will continue to like in 2017.