EV infrastructure stocks
According to Bank of America analysts, electric car adoption has reached an inflection point, and the future remains unclear. Bank of America analysts led by Harry Wyburd predicted a rapid increase in electric vehicle ownership, with EVs on European roads increasing by 100 percent since pre-Covid.
“Our updated charger forecasts see c. [circa] $80bn of potential charging infrastructure investment by 2040E [estimate],” they wrote in a research note published last week.
According to the bank, there are currently around nine public charging points per 100 electric vehicles in Europe, with the number expected to rise as more cars hit the road. In addition, BofA anticipates “significant” growth in home charging points, with around 60 million electric connectors by 2030.
Among the stocks recommended by BofA are:
“We estimate that power semiconductor demand related to charger deployments in Europe can increase from the low tens of millions of US dollars per year to c$50 million per year by 2025 and c$100 million per year by 2030,” the analysts said, naming Infineon and STMicro as beneficiaries.
Major oil companies
According to BofA, Big Oil can create “significant value” by “shifting their equity story to Big Energy,” with a greater emphasis on decarbonization. Analysts noted that the shift was becoming more pressing for these companies as a result of shareholder pressure and the Hague District Court’s demands that Shell meet the Paris Agreement’s climate targets.
The analysts chose BP, Shell, and Total, and stated, “We believe EV charging will grow in importance in linking Big Oil’s existing Marketing footprints (including global brand recognition and support from their commodity trading desks) with Big Oils’ expansion into electricity supply.”
Suppliers of automobiles
Valeo manufactures parts for electric vehicles of all sizes, as well as a variety of charging components for manufacturers such as Volkswagen and Mercedes. BofA rates it as a buy, noting that its joint venture with Siemens now has a 40 percent market share in the high voltage charging sector.
Mining and metals
Copper producers Antofagasta and miner Boliden are BofA’s buy picks, with copper likely to be a key component of EV chargers as well as inside the vehicle. “New technologies that are gaining traction, such as renewables, energy storage, and electric vehicles, have one thing in common: they require a set of commodities we define as MIFTs, or metals important for future technologies,” wrote BofA analysts.
These are abnormally cheap dividend aristocrats according to Credit Suisse
The Wall Street firm’s “dividend aristocrats” are stocks that have been able to increase their dividend per share year after year over a long period of time. On a forward price-to-earnings basis, these stocks are also relatively cheap.
According to Credit Suisse, the S&P 500’s annualized total returns — total returns with dividends reinvested — have been 6.8 percent since 1900. This compares to annual real price returns of only 2.5 percent. As a result, dividends have accounted for approximately 63 percent of total returns.
“However, we believe that focusing solely on high yield has been an unconvincing strategy,” said Credit Suisse research strategist Andrew Garthwaite. “In fact, the highest-yielding quintile of stocks has been the worst performer over the last decade (they tended to be the heavily technically disrupted value stocks), and the high trailing dividend yield was frequently illusory (as dividends were cut).”
“Unsurprisingly, the lowest-yielding stocks in a pro-growth environment have outperformed,” Garthwaite added.
According to Credit Suisse, the combination of dividend growth and dividend yield could be a winning formula. According to Credit Suisse, “dividend aristocrats” with yields above 2% have become abnormally cheap.
“The dividend aristocrats remain extremely cheap to the market on both 12m fwd P/E and P/B relatives, with P/B relatives only slightly off their COVID-trough,” Garthwaite said.
3M and Caterpillar are among the quality names on the list. The dividend yields on the two manufacturing behemoths are 3% and 2%, respectively. Despite the fact that 3M has gained nearly 14 percent and Caterpillar has gained more than 19 percent this year, Credit Suisse maintains a buy rating on the stocks.
Chevron and Emerson Electric, both energy companies, made the list of “dividend aristocrats.” Chevron pays a 4.9 percent dividend yield, while Emerson Electric pays a 2.1 percent dividend yield.
Chevron’s stock is up 25.8 percent in 2021 as energy stocks soar. This year, Emerson Electric has increased by more than 20%.
Coca-Cola, McDonald’s, and Pepsico were also named to Credit Suisse’s list. Coca-Cola pays a 3.1 percent dividend yield. The dividend yields at McDonald’s and Pepsico are 2.3 percent and 2.9 percent, respectively.
Coca-Cola shares are down about 2% in 2021, while Pepsico is trading near the bottom. So far this year, McDonald’s stock has gained about 8%.
Johnson & Johnson, Sysco, and VF Corp. were also named to the list of “dividend aristocrats.” Johnson & Johnson has a 2.6 percent dividend yield. Both Sysco and VF Corp. pay a dividend yield of 2.4 percent.
All of the “dividend aristocrats” on this list have a dividend yield greater than 2% and a Credit Suisse outperform rating. Take a look at the stocks available here.