UBS Updates Top High-Yielding Dividend Ruler Stocks for November
Despite the concern that seems to be bubbling right at the surface of the stock market over interest rates going higher, the fact is, even if the Federal Reserve does start to raise rates in the summer of next year, the increments will be small, most likely slow, 0.25 basis point increases. The top dividend-paying stocks are still paying as much as, or in many cases, more than the 30-year Treasury bond. A new report from UBS updates the firm’s top dividend ruler stocks list.
The UBS team remains very positive on the metrics surrounding the U.S. economy. While growth remains solid despite sluggishness overseas, U.S. consumer confidence is at post-recession highs and businesses are finally investing for future growth, after years of holding back spending. Third-quarter S&P 500 earnings are on track to increase more than 10%, the fastest growth in three years.
We screened the UBS list for the top yielding stocks to buy now.
Dominion Resources Inc. (NYSE: D) is expected to grow the company dividend 7% this year, in line with the past four years. The company pulled in operating revenue of $3.2 billion for the most recent three-month period, beating estimates by 4.8%. Although Dominion has boosted sales, it kept less than expected as profit. The company recently had some headline issues as a Virginia nuclear plant has fuel rod issues. Fortunately, everything was contained with no environmental damage. Many analysts on Wall Street think that the new EPA bill may actually provide a tailwind for this top utility.
Dominion Resources investors are paid a 3.30% dividend. The Thomson/First Call consensus price target for the stock is $73.60. Shares closed Friday at $73.89.
Intel Corp.‘s (NASDAQ: INTC) new commitment to smartphone and mobile applications, combined with the resurgence of PC growth this year, has made it one of the best large cap value stocks to buy in 2014, and the same outlook can drive the stock next year. Intel trades at 15 times forward earnings, more than in recent years, but still a reasonable multiple for investors looking for growth. The UBS team cited lower beta, a very fair dividend yield and operating leverage as good reasons to invest in the chip giant.
Intel shareholders are paid a solid 2.7% dividend. UBS has a $37.50 target, while the consensus target is $34.77. Intel closed Friday at $33.74.
Northeast Utilities (NYSE: NU) raised its dividend 7% in February, and it is expected to continue to grow dividends between 6% and 8%. The company serves 3.6 million electric and natural gas customers in three New England states. The company notes that, “The region’s renewable and carbon mandates are not achievable under the current market framework.” That’s 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.
Investors are paid a 3.1% dividend. The consensus price objective is $48.61. Shares closed higher than that figure Friday at $50.70.
Occidental Petroleum Corp. (NYSE: OXY) announced it will continue to grow dividends and expects to begin buying back more shares this year and beyond, a double plus for shareholders. The company finally rewarded activist investors this year when it announced the spin-off its California assets into a separate company. Occidental had faced calls from Wall Street and activist investors for years 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.
Occidental shareholders are paid a 3.3% dividend. The UBS price target is $104, and the consensus target for this beaten down energy company is $105.33. Shares closed Friday at $88.04.
British American Tobacco PLC (NYSE: BTI) announced earlier this year a 6% dividend increase. The company’s predictable cash flow translates into very consistent dividend growth. The stock got a nice lift after the merger of Lorillard and Reynolds was announced. That merger has been slowed by regulators reviewing antitrust issues, but in the end, most on Wall Street feel it will be completed.
Investors are paid an outstanding 4.2% dividend. The consensus price target for the European-based tobacco giant is $129. The shares closed trading on Friday at $114.24.
With the prospects for a positive fourth quarter and strength into 2015, more conservative investors may want to focus on these top growth and income stocks. They are lower beta than momentum names, and they consistently raise dividends to reward shareholders.