The weaker the U.S. dollar gets, the better things look for many of the top industrial stocks, and there is a very simple reason why. Many of the top industrial stocks do a tremendous amount of their overall business and sales outside of the United States. The stronger the dollar is, the more expensive the products they make and sell become. It’s a good bet that the dollar stays weaker, as the Federal Reserve is in no position to raise interest rates, perhaps for the rest of this year. That is a move that should help the industrial sector.
One of the analyst firms we cover here at 24/7 Wall St. is UBS, and its analysts are modestly positive with the overall sector. They have the industrial sector as a whole rated Neutral, and they favor the transportation subsector overall. UBS has four stocks on its list that are the equity preference or bellwether members that pay solid dividends.
Shares of this top aerospace industrial company are still down almost 8% since the beginning of the year. Boeing Co. (NYSE: BA), together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide. The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support and Boeing Capital.
This company is one of the most preferred stocks at UBS in the industrial transportation subsector. Boeing investors are paid a very solid 3.25% dividend. The Thomson/First Call consensus price target for the stock is listed as $145.72. The stock closed trading on Thursday at $134.42 per share.
This iconic blue chip industrial has been on a strong roll, and the currency tailwinds may help to continue the winning ways. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance. Wall Street analysts feel that the American giant will be a large player in the efficient energy field.
The company is in the middle of a huge plan that is scaling back many of its operations and returning capital to shareholders. GE has signed deals to sell $166 billion worth of assets in its GE Capital segment. Of that total, $146 billion has closed. GE Capital paid a $7.5 billion dividend to the parent company in the first quarter and is on track to contribute $18 billion in the fiscal year.
The company posted solid first-quarter numbers that were somewhat hampered by slower organic growth. GE does an estimated 52.9% of its total sales overseas, so a weaker dollar surely could help the rest of this year and into 2017.
Investors in GE are paid a solid 3.07% dividend. The stock is listed as a bellwether at UBS. The consensus price objective is at $33.23. The stock closed most recently at $30.09 a share.