The United States Presidential election of 2016 will take place on Tuesday, November 8, 2016.
With Hillary being the nominee for the Democrats, it’s important to not only look at what stocks will benefit from her policies, but also those that will suffer. Clinton has taken some definitive stances that could impact various sectors and industries, potentially in a negative way. It’s particularly important for dividend stock investors since – if Hillary is elected – these stocks and sectors could see dwindling cash flows and, depending on how many terms she wins, could realize painful dividend cuts.
Three stocks that should perform well under a Hillary Presidency:
|Ticker||Stock name||Sector||Industry||Hillary’s Stance|
|(NEE )||NextEraEnergy,Inc.||Utilities||Electric||Wants to install 500 million solar panels by 2020. She is no friend of the coal industry.|
|(HCP )||HCP, Inc.||REIT||Healthcare||Promises to keep Obamacare where it is.|
|(LMT )||Lockheed Martin||Industrial Goods||Aerospace - Defense Products & Services||While most people equate Donald Trump as being tough on foreign policy, Hillary has taken a surprisingly tough stance as well. Analysts expect Clinton to have a more aggressive militaristic tone than President Obama.|
Three stocks that should perform poorly under a Hillary Presidency:
|Ticker||Stock name||Sector||Industry||Hillary’s Stance|
|(GS )||Goldman Sachs||Financial||Investment Brokerage - National||When she was senator from New York, Hillary did vote for the highly regulatory Dodd-Frank Bill. So it’s not surprising that in recent weeks, she has called for a strengthening of the wide-sweeping financial reform bill.|
|(DV )||DeVry Education Group||Services||Education & Training Services||Clinton is a huge fan of making college affordable for middle- and lower-class families.|
|(WMT )||Wal-Mart Stores, Inc.||Services||Discount/Variety Stores||One of Clinton’s main talking points for her campaign has been the boosting of the middle- and lower-classes standard of living. Hillary has already proposed raising the Federal minimum wage to around $12 to $15.|
Big on Renewable Energy
Hillary Clinton is a huge proponent of renewable energy
Hillary has made it clear that she is no friend of the coal industry. Carbon emissions, fossil fuels and other “dirty” forms of energy are currently in her crosshairs.
Green and renewables have become a big talking point in her policies and she has gone so far as to promise to install 500 million solar panels by 2020. While there are plenty of solar firms, most aren’t profitable and don’t pay dividends. With that being the case, the only real winner for Clinton’s future energy policies is utility NextEra Energy (NEE ).
The key for NEE is that it owns/operates the nation’s largest collection of cogeneration plants, solar and wind farms, which makes it immune to the effects of regulations on old-style coal-fired plants as well as a big winner under a Clinton Presidential win.
The focus on renewables has afforded NEE the perfect combination of growth and stability. NextEra has enjoyed much stronger earnings growth than its more traditional rivals. Since 2005, it has boosted its dividend payout by more than 150%.
Hillary Clinton is a major supporter of Obamacare
Another major mandate for Hillary will be making sure that the Affordable Care Act, aka Obamacare, stays where it is. Under a Hillary Presidency, all sorts of health care-related stocks should benefit from the continued rollout of the Act and demand for medical care. HCP (HCP ) is in a unique position to benefit from a Clinton win.
HCP is a real estate investment trust (REIT) that owns hospitals, doctors’ offices and other medical buildings, and has nearly 1,200 properties in all. The beauty of HCP is that it doesn’t run the hospitals or the doctors’ offices; it just owns the buildings. That allows it to sit back and collect a rent check every month. The vast bulk of HCP’s properties are custom built and are on long-term operating contracts. This provides HCP with high-occupancy rates and stable cash flows.
The firm is undergoing a transition to rid itself of a few problem subsectors of the medical property market, but when it’s done, it’ll be a lean, mean health care machine. One that should benefit from a Clinton win.
Strong on Defense
Hillary Clinton has an aggressive stance on foreign policy
While most people equate Donald Trump as being tough on foreign policy, Hillary has taken a surprisingly tough stance as well. Analysts expect Clinton to have a more aggressive militaristic tone than President Obama. That has her promising to get tough with terrorist threats from ISIS, as well as holding China accountable in the territorial dispute over the South China Sea. Clinton has consistently backed Israel and has stated that she will get tough with Russia’s Vladimir Putin.
This all means great things for Lockheed Martin (LMT ). LMT is the nation’s largest defense contractor. Last year, LMT received more than $36 billion in contract wins and payments from various governments, private agencies and other authorities for its services.
A Clinton win would certainly keep the spigot of cash flowing back into LMT’s pocket. For investors, that means more cash into their pockets as well.
Bad for Bank Stocks
Hillary Clinton has promised tougher financial reforms
Hillary has promised to get tough on the big banks. So it’s not surprising that in recent weeks she has called for a strengthening of the wide-sweeping financial reform bill. While she hasn’t outright called for a breakup of the big banks, she has mentioned how much influence and power they have.
That’s a problem, if you’re Goldman Sachs (GS ).
As the epitome of Wall Street greed, Goldman could be in the crosshairs of any future Clinton-inspired bank/financial regulation. With a Clinton Presidency, Goldman Sachs and its 1.60% dividend yield could be one of the first financial dominoes to fall.
Hillary Clinton has a strong desire to make college affordable for the middle class
Clinton is a fan of making college affordable for middle- and lower-class families. That includes boosting money for scholarships and grants at both community and state universities. However, the push towards education does not include for-profit colleges.
With that in mind, DeVry Education Group (DV ) could be a big sell if Clinton is elected. While DV’s bread-n-butter is still technical schooling, it has expanded into graduate programs and other degrees. Considering that DeVry has already been subject to a Federal lawsuit, a Clinton Presidency could severely hurt the stock and its 1.63% yield.
Low Wage-Focused Companies
Hillary Clinton has expressed interest in raising the national minimum wage
Hillary has already proposed raising the Federal minimum wage to around $12 to $15 and she has sought to help see the expansion of various workers’ benefits. Ultimately, her policies on this front would be a boon to labor. Not so much, if your business model makes use of cheap labor to keep profit margins high.
In recent quarters, Wal-Mart (WMT ) has mentioned labor-cost pressures as a drag on its earnings as some states have already adopted high minimum wages. While high labor costs wouldn’t sink the big-box retailer, we could see some lower profit growth from WMT.
The Bottom Line
Just as a Clinton Presidency could help several sectors, they could hurt just as many. Her stances against the big banks and for-profit education, as well as her policies on strengthening labor could negatively impact stocks in these industries. For dividend investors, it’s something to watch. If we’re saying “President Clinton” come November, investors should tilt their portfolios accordingly.
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