UBS: 5 top high-yield­ing div­i­dend stocks for rest of 2014

Financial Mirror (Cyprus) - - FRONT PAGE -

De­spite a big ramp-up in vo­latil­ity in Septem­ber and Oc­to­ber, the over­all mar­ket trend con­tin­ues to be a pos­i­tive one. In fact, one top firm made the case Mon­day that the mar­ket could be cleared to trade to 2,300 on the S&P 500, as rates stay low and re­cent cur­rency de­val­u­a­tions in Europe and Ja­pan help to spur eco­nomic growth and im­prove the over­all global pic­ture.

In a new re­search note from the Div­i­dend Ruler team an­a­lysts at UBS, they fore­cast that an im­prov­ing U.S. econ­omy and ris­ing cor­po­rate prof­its could be the dom­i­nant theme driv­ing stocks higher over the next sev­eral quarters. As re­ported re­cently, midterm elec­tion years have his­tor­i­cally been ex­tremely pos­i­tive for stocks.

While dol­lar strength re­mains a con­cern, many of th­ese high­est yield­ing stocks on the NYSE have a bal­anced do­mes­tic and global business:

Do­min­ion Re­sources Inc. (NYSE: D) is ex­pected to grow its div­i­dend 7% this year, in line with the past four years. The company pulled in op­er­at­ing rev­enue of $3.2 bln for the past three-month pe­riod, beat­ing es­ti­mates by 4.8%. Although Do­min­ion has boosted sales, it kept less than ex­pected as profit. The company re­cently had some head­line is­sues as a Vir­ginia nu­clear plant had fuel rod is­sues. For­tu­nately, ev­ery­thing was con­tained with no en­vi­ron­men­tal dam­age. In­vestors are paid a 3.43% div­i­dend. The Thom­son/First Call con­sen­sus price tar­get for the stock is $72.14. Do­min­ion closed Mon­day at $70.07 a share.

Oc­ci­den­tal Pe­tro­leum Corp. (NYSE: OXY) an­nounced it will con­tinue to grow div­i­dends and ex­pects to be­gin buy­ing back more shares in 2014 and beyond, a dou­ble plus for share­hold­ers. The company fi­nally re­warded ac­tivist in­vestors ear­lier this year when it an­nounced a spin-off of its Cal­i­for­nia as­sets into a sep­a­rate company, fol­low­ing in­creased calls to split its U.S. business from its in­ter­na­tional op­er­a­tions, valu­ing the as­sets at $19-22 bln. Share­hold­ers are paid a 3% div­i­dend. The con­sen­sus price tar­get is $110.50. The stock closed Mon­day at $97.08.

North­east Util­i­ties (NYSE: NU) raised its div­i­dend 7% in Fe­bru­ary, and is ex­pected to con­tinue to grow div­i­dends be­tween 6% and 8%. The company serves 3.6 mln 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’s why it is build­ing trans­mis­sion lines to con­nect hy­dro-power in Canada to the north­east mar­kets it serves, among other projects. In­vestors are paid a 3.45% div­i­dend. The con­sen­sus price ob­jec­tive for the stock is $47.46. Shares closed Mon­day at $45.55.

Emer­son Elec­tric Co. (NYSE: EMR) ranks right near the top of the high­est yield­ing stocks in the UBS Div­i­dend Ruler port­fo­lio. The large-cap blue-chip company is a global leader in bring­ing tech­nol­ogy and en­gi­neer­ing to­gether to pro­vide in­no­va­tive so­lu­tions for cus­tomers in in­dus­trial, com­mer­cial and con­sumer mar­kets around the world. Sales in fis­cal 2013 were $24.7 bln. With solid div­i­dend cov­er­age, it is an ideal stock for long-term growth and in­come. In­vestors re­ceive a 2.8% div­i­dend. The con­sen­sus price tar­get is $71.18, and shares ended Mon­day at $62.46.

Bri­tish Amer­i­can To­bacco PLC (NYSE: BTI) an­nounced ear­lier this year a 6% div­i­dend in­crease. The company’s pre­dictable cash flow trans­lates into con­sis­tent div­i­dend growth. The stock got a nice lift after the merger of Lo­ril­lard and Reynolds was an­nounced. In­vestors are paid an out­stand­ing 4.30% div­i­dend. The con­sen­sus price tar­get for the Euro­pean­based to­bacco gi­ant is $132. The shares closed trad­ing on Mon­day at $114.46.

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