With the fear of higher rates weighing on many of the bond proxy sectors like telecom, real estate investment trusts and utilities, it is important to remember that dividends are a critical part of total return and can be the key for investment success. Again total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13% — 10% for the increase in stock price and 3% for the dividends paid.

The UBS Dividend Ruler portfolio continues to outperform the overall market, and we continue to think that the strong showing will stay in place for the rest of this year and into 2017. The analysts focus on stocks with solid dividends that have consistently grown over time, and their performance this year is outstanding. Year to date, the portfolio is up on a total return basis 13% versus the S&P 500’s 12.9%.

The portfolio team adds BlackRock Inc. (NYSE: BLK), a top financial services company, to the portfolio, and many on Wall Street love the firm’s growth potential. It is the largest asset manager in the world, with roughly $4.9 trillion in assets under management. Its acquisitions of Merrill Lynch Investment Management (MLIM) and iShares transformed it from a fixed income manager into a multi-product and multi-channel giant, with roughly 40% of its assets under management overseas. It has leading franchises in exchange traded funds, institutional fixed income, alternatives and cash. It also operates Solutions, a leader in risk analytics.

The UBS noted in its research:

Strong historical and prospective dividend growth is underpinned by the company’s high quality, diversified business model. Dividends have increased 18% annually over the last 10 years. Dividend growth will likely moderate but remain solid in the low teens, consistent with our expectation for earnings growth in the years ahead.

BlackRock shareholders are paid a 2.33% dividend. The UBS price target for the stock is $430, and the Wall Street consensus target is $413.92. The shares closed Friday at $393.75.

In addition, here are the four top-yielding stocks currently in the portfolio that are rated Buy at UBS.

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 third-quarter earnings that came in above some estimates, but slower growth and flat volumes brought out the sellers and they tagged the stock big time. It is important to remember though that the company owns 31.5% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola investors are paid an outstanding 3.35% dividend. UBS has a $50 price target, and the consensus target is set at $46.04. The stock closed Friday at $41.74.

McDonald’s

The fast-food giant 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. Global same-store sales were up a solid 3.5%, including up 1.3% here 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 nice 3.05% dividend. The $130 UBS price target compares with the consensus price objective of $127.76. The shares closed Friday at $114.10.

Texas Instruments

This old-school chip tech company was out of favor but has come back solid. Texas Instruments Inc. (NASDAQ: TXN) is a global semiconductor design and manufacturing company that develops analog integrated circuits and embedded processors.

The company generates 80% to 90% of its revenues from its analog and embedded processing businesses, which have well-diversified end-markets (autos, industrial, personal/consumer electronics), long product life cycles and limited capital intensity. The company has 6% market share of the auto chip market.

Texas Instruments posted strong third-quarter numbers and also increased its quarterly dividend by 32% to $0.50 per share, or $2.00 annualized. The increase reflects the company’s continued strength in free cash flow generation and its commitment to return excess cash to shareholders.

Top analysts cite the potential for reduced corporate taxes, infrastructure spending and also increased defense spending as positive for the chip giant going forward.

Texas Instrument investors receive a 2.75% dividend, with the new increase. The UBS price target for the stock is set at $80, while the consensus price objective is lower at $74.23. The shares closed Friday at $72.89.

VFC

This is one of the highest yielding stocks in the UBS Dividend Ruler portfolio. V.F. Corp. (NYSE: VFC) is a leading apparel wholesaler of lifestyle brands, including North Face, Vans, Wrangler, Lee, Timberland and Nautica. VFC distributes products globally via department stores, independent retailers, specialty chains and its own retail (full price, outlet and e-commerce).

Coalition segments include Outdoor and Action Sports (60% of 2015 revenue), Jeanswear (23% of revenue), Imagewear (9% of revenue), Sportswear (5% of revenue) and Contemporary (3% of revenue).

Shareholders are paid a very solid 3.12% dividend. The UBS price objective is $59. The consensus target price is $60.39. The stock closed Friday at $54.04.

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A nice value added in the portfolio, and four additional stocks that make good sense for long-term growth and income portfolios, and all are rated Buy at UBS.

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