The more the market gets hit, the more people stare at their portfolios and wonder what would be the best additions. We frequently update the UBS Dividend Ruler stocks list, and now may be a great time to look at their highest yielding stocks. The members must have a yield equal to or higher than the S&P 500 indicated dividend yield, which is currently at 2%. The companies must show 10-year compounded annual growth rate of dividends per share greater than 4%. Currently the top dividend leaders are dominated by utility stocks, which are one of the few sectors up year-to-date.
Here are the highest yielding UBS Dividend Ruler stocks.
Dominion Resources Inc. (NYSE: D) has been on fire as investor demand for utilities has grown this year. The company raised its dividend by 7% in January, and the Merrill Lynch team thinks that the company’s natural gas infrastructure should drive solid earnings and dividend growth. Investors receive a 3.4% dividend. UBS has a $71 price target for the stock. The Thomson/First Call consensus price target is $68.93. Dominion closed Monday at $69.19.
Intel Corp. (NASDAQ: INTC) is a Neutral rated name from UBS, but it makes the Dividend Ruler list. The stock has been caught in a ratings tug-of-war on Wall Street, but many firms believe the Silicon Valley giant is poised to break out of its multiyear slump. A new commitment to smartphone and mobile applications, combined with a possible resurgence of PC growth this year, may make Intel one of the best large cap value stocks to buy. Intel trades at a very low 13.5 times forward earnings. Investors are paid a solid 3.4% dividend. UBS has a $32 price target, while the consensus target is $25.05. Intel closed Monday at $26.48.
Johnson & Johnson (NYSE: JNJ) is a top-yielding health care name and is Neutral-rated on the UBS list. With everything from medical devices to over-the-counter health items, the stock is a solid add for conservative portfolios. Investors are paid a 2.7% dividend. The UBS price target is $95. The consensus price target is even higher at $101.08. Johnson & Johnson closed Monday at $97.89.
Microsoft Corp. (NASDAQ: MSFT) has sold off recently and may be offering investors a perfect spot to scale in some capital. The company continues to evolve away from its core Office suite of products and is even developing six original shows as part of its Xbox studios plan, including shows starring Sarah Silverman and Seth Green. Investors are paid a nice 2.8 % dividend. The UBS price target is $43, and the consensus target is $39.60. Microsoft closed Monday at $39.80.
NextEra Energy Inc. (NYSE: NEE) is another top Buy-rated utility stock to make the Dividend Ruler line up. The company is a leading clean energy company with consolidated revenues of approximately $15.1 billion, approximately 42,500 megawatts of generating capacity and approximately 13,900 employees in 26 states and Canada as of year-end 2013. Investors are paid a 3.1% dividend. The UBS price target is $98, and the consensus target is $94.58. NextEra closed Monday at $93.90.
Northeast Utilities (NYSE: NU) serves 3.6 million electric and natural gas customers in three New England states and is another utility stock rated Buy at UBS. The company notes that, “The region’s renewable and carbon mandates are not achievable under the current market framework.” That is why it is building transmission lines to connect hydro-power in Canada to the northeast markets it serves, among other projects. The combination of transmission assets and renewable power will put Northeast Utilities in a solid position when it asks for rate hikes. Both tend to be viewed positively by regulators. The company raised its dividend 7% in February. Investors are paid a 3.5% dividend. UBS has a $48 price target and the consensus price target is $46.48. The stock closed Monday at $45.10.
Occidental Petroleum Corp. (NYSE: OXY) finally rewarded activist investors when the company announced that it was spinning off their California assets into a separate company. Occidental has faced calls from Wall Street and activist investors to split its U.S. business from its international operations, with analysts valuing the assets at a range of between $19 billion to $22 billion. The fact that the company is not an integrated is seen as a huge positive. Without refining or midstream operations, independent exploration and production majors like Occidental will see the full benefit of rising oil prices in their future results. Investors receive a very solid 3.1% dividend. The stock is Neutral-rated at UBS and the firm has a $107 price target. The consensus price objective is $107.05. Occidental closed Monday at $93.59.
The Dividend Ruler stocks are just the ticket for a volatile stock market. High beta names are getting crushed in this environment, and as long as the volatility stays in the market, that will remain the norm. Investors worried that we could be in for a larger sell-off may want to scale capital into these top stocks and buy partial positions now, then look for another leg down to add the balance.