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UBS Blue Chip Dividend Ruler Stocks On Sale After Wild Election
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After one of the craziest elections in U.S. history, one thing is for sure, change is coming. and it will be coming in huge doses. Interest rates that been held artificially low for years are going higher, and like one money manager recently said, keeping rates lower will be like holding a beach ball underwater. Many dividend proxy stocks are being hit, and in the process so are some top blue chips that pay solid dividends.
The UBS Dividend Ruler portfolio continues to outperform the overall market, and we continue to think that the outperformance will stay in place for the rest of the year and beyond. The analysts focus on stocks with solid dividends that have consistently grown over time, and their performance this year is outstanding.
We screened the list for the blue chip leaders that have been hit as rates have increased and found five that look outstanding now.
Coca-Cola
This company remains a top Warren Buffet holding and offers not only safety, but an incredible strong worldwide brand. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.
Led by Coca-Cola, its portfolio features 20 billion-dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade and Minute Maid. Globally, it is the top provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy its beverages at a rate of more than 1.9 billion servings a day.
The company reported solid third-quarter results that beat the Merrill Lynch estimates. The firm also noted that with margin expansion growing and headwinds from currency starting to abate, things are looking up for the beverage giant. And remember that the company owns 31.5% of Monster Beverage, which continues to deliver big numbers.
Coca-Cola investors receive a 3.4% dividend. The Wall Street consensus price target is $46.89. The stock closed Monday at $41.17.
Exxon Mobil
This company remains a top Wall Street energy pick. Exxon Mobil Corp. (NYSE: XOM) explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa, Asia, Australia and Oceania. It also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas, and petroleum products.
Top Wall Street analysts are very positive on the long term as the overall corporate strength of this massive integrated giant plays a significant part in the company’s usually solid earnings reporting pattern and in maintaining dividend coverage.
Exxon is also a very strong company from a financial standpoint. It has an AA+ credit rating and an outstanding debt-to-equity ratio of 0.23. It is free cash flow positive, with the company reporting free cash flow of $6.5 billion in 2015 and management cutting the capital expenditures budget for 2016. This is a sound investment to buy and hold forever.
Exxon investors receive a 3.52% dividend. The consensus price target is $88.52, and shares closed yesterday at $85.28.
Invesco
This financial services leader 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 seven-year bull market.
Invesco PowerShares is the boutique investment management firm that manages a family of exchange traded funds (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.
The analysts see the company as one that is best positioned to compete for share, given mix, product offerings and attractive relative performance.
Investors are paid a 3.5% dividend. The consensus target is set at $33.75. Shares closed Monday at $31.97.
Lockheed Martin
This is a top aerospace and defense stock to buy, and many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
Earlier this year Lockheed Martin was awarded a $1.27 billion contract for the delivery of 13 F-35 Lightning II aircraft. Six F-35Bs will be going to the Marine Corps, three F-35As to the Air Force and four F-35Cs to the Navy.
Shareholders receive a 2.72% dividend. The posted consensus price target is $269.53. The shares closed Monday at $267.24.
McDonald’s
The fast-food giant has been on a roller-coaster this year, but it remains a solid pick for investors seeking dividends and a degree of safety. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.
The company reported very solid third-quarter results after a so-so second quarter. Its global same-store sales were up a solid 3.5%, including up 1.3% in the United States. Top analysts around Wall Street have noted that the fast-food giant has continued to execute its restructuring plans, and they are very positive as we head toward 2017.
McDonald’s shareholders receive a 3.2% dividend. The consensus price objective is $127.20. Shares closed Monday at $117.86.
Despite some indexes hitting all-time highs after the election, these top blue chip companies are all trading well below their 52-week highs. They also make very good sense for long-term buy-and-hold portfolios looking for safe stocks that can provide solid total return.
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