3 dividend stocks to buy if Joe Biden wins the election
Despite all the media attention devoted to the impact of presidential candidates on the stock market, history shows that there is little impact. A 2004 study by the Federal Reserve found no significant correlation between risk or return across presidential cycles. The information that the market represents is far too complex for one variable to determine the outcome.
Although the the stock market is not predictableSometimes, political trends or considerations may affect certain industries. Even these predictions are risky. Some citizens who thought an Obama administration would work to undermine the Second Amendment rushed to buy guns when he was elected and continued to buy them for eight years. At the same time, expanding health care coverage to tens of millions of Americans has resulted in a surge in patient numbers and screenings for hospital systems across the country.
On the other hand, proponents of renewables feared that a Trump administration climate change skeptical and bent on relaunching fossil fuels would slow the growth of wind, solar and hydroelectric power. Instead, renewable energy consumption has overtaken coal this year, and fell from 15.6% of electricity production in 2016 to 17.5% in 2019.
So what stocks should investors watch closely when the November 3 election results are decided? Here are three income investments that would likely benefit from a Biden presidency.
1. Sturm, Ruger, & Company
During Barack Obama’s two presidential terms, Americans bought more than $ 129 billion in guns and $ 16 billion in ammunition. Perhaps due to the decrease in fear of gun control laws, gun sales declined during Trump’s years in power. This shows in the income of Sturm, Ruger & Company (NYSE: RGR)from $ 664 million in 2016 to $ 411 million in 2019.
|2019||$ 411 million|
|2018||$ 496 million|
|2017||$ 522 million|
|2016||$ 664 million|
If the Democratic candidate wins the presidency, expect gun sales to pick up. Joe Biden has twice demonstrated his willingness to enact legislation opposed by the National Rifle Association. As a senator in the early 1990s, he played a leading role in legislation establishing the background check system, as well as a 10-year ban on assault weapons and high-capacity magazines. Just as sales increased during the Obama years, guns are going to fly off the shelves in another Democratic administration. For investors looking for yield, the gun company has a dividend of 1.7%.
2. HCA Healthcare
Health has been a controversial topic this election season. After Republican lawmakers end the penalty for non-insurance coverage in the 2017 Jobs and Tax Cuts Act, a group of 18 conservative states file a lawsuit to overturn the package of the Affordable Care Act, including some of its popular provisions. By law, the percentage of uninsured Americans fell from 15.5% in 2010 to 9.2% in 2019. The rate hit a low in 2017 and has risen in each of the past two years.
Fewer uninsured Americans has led to more people seeking health services, which translates into income for health system operators like HCA Health (NYSE: HCA). One of the pillars of Biden’s health policy proposals is to create a Medicare-like public health care option. This would likely continue to increase the percentage of Americans with coverage.
Currently, the health care scholarships created by the Affordable Care Act have been filled with plans that are often too expensive or lack comprehensive coverage. Adding some of the 9.2% of Americans who still do not have coverage would provide increased revenue for HCA Healthcare. As one of the largest healthcare systems in the country – operating 180 hospitals and more than 2,100 care sites in 21 states – the company would see a significant benefit in more insured patients. More people seeking primary care, performing preventive screenings, and getting early diagnoses of cancer, mental illness and addiction would add revenue to HCA while reducing the costs associated with caring for these people if they were not. not insured, but absorbing costs.
Although management suspended the dividend due to pandemic concerns in April, stocks had returned $ 0.43 per quarter, or about 1.4%, at the current share price. Expect the dividend to return and patient numbers and profits to increase in a Biden presidency.
3. NextEra Energy
Globally, the need for renewable energy is less controversial than in the United States, where the Republican Party speaks out against accepting the science of climate change. Although the Environmental Protection Agency has weakened the limits on carbon dioxide emissions from power plants, renewable energy production has continued to grow in America.
In 2019, renewable energy sources accounted for 17.5% of electricity production in the United States, up from 15.6% in 2016. NextEra Energy has contributed with $ 75 billion in investments since 2004 and plans to spend an additional $ 30 billion until 2022. The world’s leading producer of renewable energy in wind and solar power and a leader in battery storage.
|Year||Renewable sources as a percentage of electricity production in the United States|
The former vice president has several policy proposals that would benefit NextEra. Rolling back carbon caps, paving the way for carbon neutrality as a country, and investing $ 400 billion over 10 years in clean energy are all programs that the company is in a position to benefit from.
As a global leader in solar and wind power and with a long history of successful investments in renewable energy, NextEra would likely be a trusted partner in developing plans and implementing funds in a Biden administration. Investors would undoubtedly benefit from the tailwind of regulation and capital pushing competitors to achieve what management already has. And with a dividend of 1.88%, yield-seeking investors are paid to own a company that is leading the charge in an energy revolution.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.