24/7 Wall St. Insights
- The seemingly endless political season is almost over.
- It’s possible we won’t know the winner for a while.
- Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock,” plus get our two best dividend stocks to own today.
Dividend stocks are a favorite among investors for good reason. They provide a steady income stream of passive income and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time.
In simpler terms, it’s the sum of income and stock appreciation. Dividend stocks can boost investment success by delivering regular income and capital appreciation.
After one of the wildest and most bizarre political races in the history of our country, we are finally close to a resolution. Former President Donald Trump is trying to pull off a feat that was only accomplished once in American history. After winning and serving as the 45th President, he lost in 2020 to Joe Biden, who is completing his term as the 46th President. Mr. Trump is trying to match the achievement of President Grover Cleveland, the first Democrat elected after the Civil War who served as the 22nd President from 1885 to 1889, before losing in 1888. He was subsequently reelected to a second term in 1892.
Vice President Harris is attempting to be the first woman elected President after President Biden stepped down from running for a second term. Some questioned the appointment of Ms. Harris, but the reality is that it’s moot now as we await the results. One thing is for sure: There will be a separate set of winners and losers depending on who finally captures the office as the 47th President.
If Ms. Harris wins, Wall Street thinks Utilities, Aerospace and Defense, Pharmaceuticals, Industrials, and Diversified Financials are possible winners among a slate that includes seven additional sectors. We screened those five, looking for some of the top dividend stocks in each category. Five look like incredible ideas, almost regardless of who wins. All are rated Buy by top Wall Street firms.
Why do we cover dividend stocks?
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
Utilities:
Dominion Energy
Many of the Wall Street firms we cover are still very positive on utilities, and this company pays a strong 4.53% dividend. Dominion Energy Inc. (NYSE: D) operates through four segments:
- Dominion Energy Virginia
- Gas Distribution
- Dominion Energy South Carolina
- Contracted Assets.
The Dominion Energy Virginia segment generates, transmits, and distributes regulated electricity to residential, commercial, industrial, and governmental customers in Virginia and North Carolina.
The Gas Distribution segment engages in:
- Regulated natural gas gathering
- Transportation
- Distribution and sales activities
- Distributes nonregulated renewable natural gas
This segment serves residential, commercial, and industrial customers.
The Dominion Energy South Carolina segment generates, transmits, and distributes electricity and natural gas to residential, commercial, and industrial customers in South Carolina.
Dominion serves approximately 7 million customers.
Aerospace & Defense:
General Dynamics
With wars already taking place in two areas of the world, demand remains strong in this sector. General Dynamics Corp. (NYSE: GD) operates as an aerospace and defense company worldwide and pays a 1.95% dividend.
It operates through four segments:
- Aerospace
- Marine Systems
- Combat Systems
- Technologies
The Aerospace segment produces and sells business jets and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services.
The Marine Systems segment designs and builds:
- Nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers
- Crude oil and product tankers and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs.
The Combat Systems segment:
- Manufactures land combat solutions, such as wheeled and tracked combat vehicles
- Stryker wheeled combat vehicles, and piranha vehicles
- Weapons systems, munitions, mobile bridge systems with payloads,
- Tactical vehicles, main battle tanks, armored vehicles, and armaments.
It offers modernization programs, engineering, support, and sustainment services.
The Technologies segment provides:
- Information technology solutions and mission support services
- Mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers
- Cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations
- Unmanned undersea vehicle manufacturing and assembly services.
Industrials:
UPS
With the explosion of internet commerce, this company has enormous growth potential and offers a rich 4.86% dividend. United Parcel Service Inc. (NYSE: UPS) is a package delivery company that provides transportation and delivery, distribution, contract logistics, ocean freight, air freight, customs brokerage, and insurance services.
It operates through two segments:
- U.S. Domestic Package
- International Package
The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States.
The International Package segment provides guaranteed-day and time-definite international shipping services, comprising guaranteed-time-definite express options in:
- Europe
- Asia
- the Indian subcontinent
- the Middle East
- Africa
- Canada
- Latin America
UPS is not just a package delivery company. It also provides diverse services, including international air and ocean freight forwarding, post-sales, and mail and consulting services.
Furthermore, it offers:
- Truckload brokerage services
- Supply chain solutions to the healthcare and life sciences industries
- Financial and information services
- Fulfillment and transportation management services
This broad portfolio of services ensures the company’s stability and potential for growth, making it an attractive investment option.
Pharmaceuticals:
Bristol-Myers Squibb
This top company remains a solid pharmaceutical stock to own long-term, offering an outstanding entry point and a massive 4.42% dividend. Bristol-Myers Squibb Co. (NYSE: BMY) discovers, develops, licenses, manufactures, and markets pharmaceutical products worldwide.
The company offers products in:
- Hematology
- Oncology
- Cardiovascular
- Immunology therapeutic classes
Bristol-Myers Squibb products include:
- Revlimid, an oral immunomodulatory drug for the treatment of multiple myeloma
- Opdivo for anti-cancer indications
- Eliquis, an oral inhibitor indicated for the reduction in risk of stroke/systemic embolism in NVAF and for the treatment of DVT/PE
- Orencia for adult patients with active RA and psoriatic arthritis, as well as reducing signs and symptoms in pediatric patients with active polyarticular juvenile idiopathic arthritis
The company also provides:
- Sprycel for the treatment of patients with unresectable or metastatic melanoma
- Abraxane, a protein-bound chemotherapy product
- Implicit for the treatment of multiple myeloma
- Reblozyl for the treatment of anemia in adult patients with beta-thalass
Diversified Financials
Citigroup
This is a top bank that Warren Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.45% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.
Citigroup offers:
- Consumer banking and credit
- Corporate and investment banking
- Securities brokerage
- Transaction services
- Wealth management services
Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).
Trading at a reasonable 8.9 times estimated 2025 earnings, this company looks very reasonable in what remains a volatile stock market and in a sector that has lagged some in 2024 but looks to be gaining ground.
Five High-Yield Dividend Stocks Investors Should Buy Hand-Over-Fist If Donald Trump Wins
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