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UBS Senior Equity Strategist David Lefkowitz on the sectors with the dividend-paying stocks with the best dividend growth.
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Senior equity strategist David left what's but before we didn't that the Dow is about to go positive David so yeah way it just your positive -- -- -- -- -- good -- -- -- -- -- on the -- I -- let's talk about once again different sectors where you feel there are growth dividends not just any dividends but growth dividends we'll start with consumer Staples.
-- consumer Staples is a great place to start.
If you look over the last ten years this is a sector that has grown its dividends almost 10% a year so this is actually one of the fastest growing.
Sectors when it comes to dividends.
The other thing we like about consumer Staples is that it's very broadly diversified.
And this is one of the best ways to gain exposure.
To emerging markets so a lot of the companies within the sector.
Have global brands had better penetrating into these new markets where consumers are just now beginning to accumulate wealth.
With each of your sectors we just picked out a name or to -- -- value for example is a consumer Staples company.
It's throwing off the seven point 57% -- let's go to health care.
We picked -- because a lot of people come on parents say they do like market four point 5% dividend but why is that in particular -- growth dividend.
Yeah -- I can't talk about health care in general for health care in general has has also been a good place to look for dividend growth.
We've seen.
About 7%.
Growth in dividends over the last decade.
Per year in the health -- space I feel good health care in general valuations are a fairly.
Attractive and thank you look at the large cap pharmaceutical companies.
There right now in the middle of what we call the patent cliff so the cloud should start to clear as they see less competition from the generics as we move over the next couple years.
The old dividend stand by as always been telecoms and an I don't know any -- people want parents say that you look at some of these names but for example we.
We were looking at some of the names need jump out when he sees something like say for example frontier communications and -- can't specifically talk about names but.
While that company for -- off of five point 4% dividend yield the stock itself is down 61% year for -- so my question becomes.
How important is the actual stock performance vs what that dividend has done over the past ten years.
And the stock performances is a crucial component of of this and we really look at it from a total return perspective soon.
They need to change in the stock price as well as the dividend.
I would encourage people not to be just -- drawn into a dividend because of its of its size you have to look at the the underlying fundamentals of a company's how sustainable the dividend is going forward.
And utilities also an old standby when it comes to dividends and we picked Brett -- Pepco rather five point 8% yield but.
Do utilities continue to be leadership place because of the growth dividends.
Yeah if it's not an area that is very attractive to us in our opinion it's not an area that has seen a lot of dividend growth historically.
A lot of utilities.
Actually issue a lot of equity despite paying high dividends aren't and at the same time with interest rates probably moving higher over time.
That's -- -- -- a little bit the head winds that were the highest -- parts -- -- yes please everybody watch -- you know they -- paid generous dividends no matter what sector but they also constantly raise cash by issuing -- stock some -- -- -- so that's when you -- -- you gotta be careful.
Good to see you David thank you for being here.
I -- my pleasure David left -- it's a UBS senior equity strata.
