Investing

How a Weaker Dollar Will Help 4 Top Dividend-Paying Blue Chip Stocks

General Electric

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. The Merrill Lynch 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 to scale back many of its operation and return capital to shareholders. GE announced a restructuring plan last year that includes buying back up to $50 billion of its shares, selling about $30 billion in real estate assets over the next two years and divesting more GE Capital operations. The continued restructuring and sale of the appliance division provides some cushion to earnings estimates

The company posted solid fourth-quarter numbers that were somewhat hampered by slower organic growth and the Alstom power division purchase, which the company purchased from the French turbine maker. The deal was finalized in November for $10 billion and creates a $50 billion turbine services backlog, another positive for 2016 and beyond.

GE investors receive a 2.99% dividend. The Merrill Lynch price target is $33. The consensus target is $32.29. Shares closed Friday at $28.64.

McDonald’s

The fast-food giant has been on fire over the past six months, but it still remains a solid pick for investors seeking dividends and a degree of safety. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.

Wall Street as a whole 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 as a key element of its shareholder value proposition. McDonald’s has increased its dividend every year for the past 39 years.

The company reported outstanding fourth-quarter results in late January, with U.S. same-store sales rising an impressive 5.7% boosted by all-day breakfast. Many are looking for a repeat when the company reports first-quarter numbers. Hedge funds are very bullish on the company and a total of 20 own the stock.

McDonald’s investors receive a 2.78% dividend. The $130 Merrill Lynch price target is higher than the consensus target of $126.64 The stock closed Friday at $127.96.


All these stocks make good sense for long-term growth portfolios. They trade at reasonable valuations and offer stellar growth potential. Toss in rising dividends, and they are total return vehicles for almost any market. Plus, the benefit of the softer dollar may help boost earnings.

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