Bank of America
Ticker: BAC
Industry: Financials
Rationale: "We see the highest rate sensitivity and the most excess capital vs. the peer set ... As the regulatory backdrop is likely to become less onerous, we expect dividends to become a larger part of its allocation strategy, driving a doubling over the next two years."
Regions Financial
Ticker: RF
Industry: Financials
Rationale: "We expect a combination of stable expenses, improving loan growth, stronger net interest margins and increased shareholder payouts to help RF deliver on its financial targets."
Caterpillar
Ticker: CAT
Industry: Industrials
Rationale: "Machinery’s share of industrial capex is still in the early stages of recovery ... Management’s focus on structurally improving returns on capital and harvesting its investments should drive strong FCF growth through 2019."
Phillips 66
Ticker: PSX
Industry: Energy
Rationale: "We see cash flow increasing meaningfully for PSX heading into 2018 as large projects come into service and capex needs step down, which should help sufficiently cover its dividend."
Cisco Systems
Ticker: CSCO
Industry: Information technology
Rationale: "We see 2018 as a key gross margin inflection point ... CSCO recently raised its quarterly dividend by 14% and we see further upside to payouts."
Amgen
Ticker: AMGN
Industry: Healthcare
Rationale: "New product cycles, led by approved drug Repatha (high cholesterol treatment) and upcoming approval of Erenumab (migraine drug) should drive the next leg of growth and help offset revenue/margin loss from patent expiry in its base business ... AMGN recently announced a 15% DPS growth rate for 2018 (in line with our estimate) and we see another 10% growth in 2019."