With the Thanksgiving holiday right around the corner and only seven weeks left in this trading year, many of the top firms that we cover on Wall Street are making some final adjustments to the top portfolios they present to institutional and high net worth customers. With the broad-based S&P 500 up less than 2% for the year, gains above middle to high single-digits may be elusive this year.
In a new research report, the UBS Dividend Rulers portfolio analysts make a big change to the portfolio for the stretch run by adding a long-time investor favorite that has been somewhat out of favor this year. Now may be a good time for investors to consider top stocks with dividends that are growing, as they have underperformed this year and may be poised for a strong 2016.
The UBS team adds McDonald’s Corp. (NYSE: MCD) to the portfolio, and the fast-food giant has struggled over the past couple of years but posted outstanding third-quarter earnings. The analysts make the solid point that the company didn’t keep up with a major shift in consumer preferences to higher quality food and greater reliance on technologies such as mobile. In addition, the company’s marketing message has been muddled and productivity has suffered.
UBS, like many, is very pleased with the efforts from new CEO Stephen Easterbrook. He is taken the bull by the horns with a strategic corporate reset by changing the menu, updating the hours breakfast is served and modernizing the restaurants. Management prioritized that dividend growth is a key element of its shareholder value proposition. McDonald’s has increased its dividend every year for the past 39 years.
McDonald’s investors receive a solid 3% dividend. The Thomson/First Call consensus price target for the stock is $115.05. Shares closed Friday at $113.31.
Here are the four top-yielding stocks in the Dividend Rulers portfolio now.
Many of the Wall Street firms that we cover are becoming more positive on utilities again after this year’s underperformance. Dominion Resources Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems with 928 billion cubic feet of storage capacity and serves utility and retail energy customers in 13 states.
Dominion investors receive a solid 3.82% dividend. The UBS price target is $79, and the consensus target is $78.18. The stock closed Friday at $67.85.