UBS Makes Huge Q4 Addition to Popular Dividend Ruler Portfolio

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Exxon Mobil

This company remains a top Wall Street energy pick. Exxon Mobil Corp. (NYSE: XOM) explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa, Asia, Australia and Oceania. It also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas, and petroleum products.

Top Wall Street analysts are very positive on the long term as the overall corporate strength of this massive integrated giant plays a significant part in the company’s usually solid earnings reporting pattern and in maintaining dividend coverage.

Exxon 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. It 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. This is a sound investment to buy and hold forever.

Exxon investors receive a 3.45% dividend. The consensus price objective is $89.63. Shares closed on Wednesday at $87.13.

Intel

This leader in semiconductors is working hard to scale away from dependence on personal computers. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide. The company’s platforms are used in various computing applications comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

The company also provides communication and connectivity offerings, such as baseband processors, radio frequency transceivers and power management integrated circuits, and tablet, phone and Internet of Things solutions, which include multimode 4G LTE modems, Bluetooth technology and GPS receivers, software solutions and interoperability tests, as well as home gateway and set-top box components.

The company pre-announced better than expected revenues for the quarter, and the UBS report said:

We keep a Buy rating as better PC sales remain a key driver for the stock as we estimate PCs are still 53% of Intel’s total sales. Intel reported its total third quarter 2016 sales would be higher than its original guidance by $700M, or 5%. We estimate Intel’s third quarter 2016 PC sales will be up 12% quarter-over-quarter.

Shareholders are paid a 2.8% dividend. The $43 UBS price target compares with a consensus estimate of $40.47. The shares closed at $37.13.

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. Merrill Lynch noted that charges and refranchising gains make the earnings numbers a bit dicey, so the firm lowered its GAAP numbers to $5.40 from $5.60.

McDonald’s shareholders receive a 3.28% dividend. The UBS price target is $138. The consensus target is $128.33, and shares closed Wednesday at $114.71.

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A nice value added in the portfolio, and four 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 rest of the fall.