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What are we looking for?

U.S. stocks that are set to jump on tariff easing – and sustain their dividends in the meantime.

The screen

U.S. companies are feeling the uncertainty of U.S.-China trade talks – not to mention the tariffs themselves. This includes the Trump administration’s recent duty increases on US$200-billion in imports.

Still, we believe the Sino-U.S. tariff war will likely end sooner rather than later.

Either way, to cut risk, investors should stick to companies with sound growth prospects despite tariffs. For many, high-profile tariff exposure has held back their shares more than fundamentals warrant. That’s a buying opportunity in top stocks that will gain from trade normalization.

We’re looking for sustainable-dividend payers among those hurt by tariffs. We then apply our TSI Dividend Sustainability Rating System, which awards points based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is a leader in its industry.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated nine stocks. Walmart Inc. and Home Depot Inc. rely on China for merchandise. Caterpillar Inc. makes and sells earth-moving equipment there. China is no less a key market for 3M Co., while Nike Inc.’s sales and production are directly tied to the world’s second-largest economy. Toy maker Hasbro Inc. sources most of its products from China. Tariffs on agricultural crops, especially soybeans, have hurt Deere & Co. as U.S. farmers delay buying equipment. Apple Inc. remains vulnerable to tariffs given its phone production in China. Auto-parts vendor Genuine Parts Co. buys half its products from China.

We advise investors to do additional research on any investments we identify here.

U.S. stocks that are set to jump on tariff easing and in sustain their dividends

Ranking*CompanyTickerDividend Sustainability RatingPointsDiv. Yield %Market Cap (US$Bil)Recent Price (US$)1Yr Total Return %
1Walmart Inc.WMT-NHighest102.1303.4102.1223.8
2Apple Inc. AAPL-QHighest101.7820.1177.38-5.9
33M Co.MMM-NAbove Average93.594.2161.40-18.9
4Caterpillar Inc.CAT-NAbove Average93.469.5121.48-22.1
5Genuine Parts Co.GPC-NAbove Average93.114.297.806.9
6Home Depot Inc.HD-NAbove Average92.9211.2189.991.7
7Deere & Co.DE-NAbove Average92.243.8141.13-11.2
8Nike Inc.NKE-NAbove Average91.1127.678.879.2
9Hasbro Inc.HAS-QAbove Average82.812.397.1410.8

Dividend Advisor

Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.