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