Investing

UBS Makes Huge Change to Dividend Ruler Stocks Portfolio

Exxon Mobil

This company remains a top Wall Street energy pick. Exxon Mobil Corp. (NYSE: XOM) is an energy sector play that the Merrill Lynch analysts are very positive on long-term, as the overall corporate strength of the massive integrated giant plays a significant part in the company’s usually solid earnings reporting pattern and in maintaining dividend coverage.

This is also a very strong company from a financial standpoint. It has an AA+ credit rating and an outstanding debt-to-equity ratio of 0.23. Exxon Mobil is free cash flow positive, with the company reporting free cash flow of $6.5 billion in 2015 and management cutting the capital expenditures budget for 2016. It is a sound investment to buy and hold forever.

Exxon investors receive a 3.45% dividend. The UBS rating is Neutral and the price target is set at $90. The consensus price objective is $89.63. Shares closed on Monday at $87.29.

Invesco

This financial services leader has strong positions in both equity exchange traded funds (ETFs) and actively managed equity and debt mutual funds. Invesco Ltd. (NYSE: IVZ) looks to be very well-positioned to capitalize on inflows into both segments, as well as higher asset prices, as many on Wall Street see a continuation of the seven-year bull market.

Invesco PowerShares is the boutique investment management firm that manages a family of exchange traded funds (ETFs). The company has been part of Invesco, which markets the PowerShares product, since 2006. The incredible growth and popularity of the product is why many on Wall Street remain so bullish on the stock.

The analysts see the company as one that is best positioned to compete for share, given mix, product offerings and attractive relative performance.

Invesco investors receive a rich 3.65% dividend. UBS has a $30 price target, and the consensus target is $33.67 The shares closed Monday at $31.61.

McDonald’s

The fast-food giant has been hit hard since earnings were released, but it 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.

The company reported solid second-quarter results, but the U.S. store comparable sales growth of just less than 2% disappointed investors. Top analysts note that charges and refranchising gains make the earnings numbers a bit dicey, so some have lowered their GAAP numbers for the year.

McDonald’s shareholders receive a 3.11% dividend. The $138 UBS price target is well above the $129.45 consensus target, as well as Monday’s close at $115.95.

A big swap in the portfolio, and three additional stocks that make good sense for long-term growth and income portfolios. With volatility spiking, moving to these lower risk companies may be a solid plan for the fall.