With the long Treasury bond hitting the lowest yields we have ever seen, it is becoming apparent that, despite some calling for the Federal Reserve to raise rates as soon as this summer, U.S. interest rates likely will not be raised in a hurry. Horrible durable goods numbers, no inflation, talk of deflation and an economy that really cannot get started could push the rise to later this year, or even out into 2016. That once again, makes the top dividend-paying stocks attractive for growth and income investors. A new report from UBS includes the first 2015 changes to the firm’s Dividend Ruler list of stocks to buy.
Rockwell Automation was added to the list, and long-time members Emerson Electric and UPS are removed. We screened the list for the current highest yielding stocks.
British American Tobacco PLC (NYSE: BTI) announced last year a 6% dividend increase, and the company is expected to once again raise the dividend in 2015. 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, which should be completed in the first quarter, as shareholders will vote Wednesday. That merger has been slowed by regulators reviewing antitrust issues, but in the end, most on Wall Street feel it would be completed.
Investors are paid an outstanding 4.22% dividend. The Thomson/First Call consensus price target for the European based tobacco giant is $124. The shares closed trading on Tuesday at $114.46.
Dominion Resources Inc. (NYSE: D) is expected to grow the company dividend 7% this year, in line with the past four. The company pulled in operating revenue of $3.2 billion for the most recent three-month period, beating estimates by 4.8%, and it will report fourth-quarter earnings on February 6. Although Dominion has boosted sales, it kept less than expected as profit. The company recently filed a petition with Virginia State Corporation Commission to build the first large-scale solar facility in Virginia.
Investors are paid a 3.03% dividend. The consensus price target is $78.56, and the stock closed Tuesday at $78.98 a share.
Northeast Utilities (NYSE: NU) raised its dividend 7% last time and is expected to continue to grow dividends between 6% and 8% for shareholders in 2015 and beyond. The company, which recently changed its name to Evercore Energy, 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 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.
Northeast investors are paid a 2.81% dividend. The consensus target price is $53.31. Shares closed Tuesday at $55.81.
Occidental Petroleum Corp. (NYSE: OXY) is a top oil stock to buy and is on the screen at many of the Wall Street firms we cover. The company announced last year it will continue to grow dividends and expects to begin buying back more shares this year and beyond, a double plus for shareholders. Analysts feel that the company faces the oil price correction with the strongest balance sheet in the sector, with net cash at year end 2014 estimated at around $1.7 billion, and a whopping $11 per share of cash available for buy backs. With chemicals and other products helping to blunt the drop in oil, Occidental is well positioned to ride out the storm.
Occidental shareholders are paid a solid 3.7% dividend. The consensus price target is placed at $85.09. The stock closed Tuesday at $79.41.
Toronto-Dominion Bank (NYSE: TD) is based in Canada, and it is a stock that the UBS team is very bullish on. TD Bank, is one of the 10 largest banks in the United States, providing more than 8 million customers with a full range of retail, small business and commercial banking products and services at approximately 1,300 locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. The bank has continued an aggressive U.S. expansion plan that the UBS team sees as a strong adjunct to the Canadian business.
Toronto-Dominion investors are paid a very solid 3.8% dividend. The consensus price target is $62.41. Shares closed trading on Tuesday at $42.10.
With the stock market, especially the U.S. market, probably the best place for investors this year, these top stocks will provide investors income and potential growth, without the volatility momentum growth stocks have. Again, with interest rate increases still a jump-ball, owning stocks that regularly raise dividends makes sense.