13 Best Stocks to Buy If President Donald Trump Wins Re-Election
The 2020 election likely will be a pivot point for several areas of the market. Here are 13 of the best stocks to own should President Donald Trump win re-election.
It's best to leave your politics at the door when investing. No matter how much you like or dislike the man in the White House, presidential policies generally matter a lot less for the stock market than Federal Reserve policy or the general health of the economy.
That said, the best stocks to buy under a Republican administration are sure to be different than those under a Democratic administration.
We're currently in the homestretch of what has already been a raucous election cycle. But it's far from over. As of late October, the betting markets were pricing in a 66% probability of former Vice President Joe Biden taking the Oval Office. But at various points in 2020, it has been a dead heat or Trump was actually favored.
Meanwhile, most national polls show Biden with a roughly 9% lead. But national polls don't really matter in our electoral systems. It comes down to the individual swing states, and many of the critical swing states are within the margin of error. And in a year with record mail-in ballots and the highest voter turnout since 1908 by some measures, anything can happen.
In other words, this race is far from over.
"We're advising our clients to be cautiously optimistic going into the election," says Chase Robertson, Managing Partner of Houston-based RIA Robertson Wealth Management. "We're hedging our bets, raising a little cash and spreading our positions across sectors we think will do well regardless of who takes the White House."
Various studies have shown that stocks tend to do well following the re-election of a sitting president. After Ronald Reagan, Bill Clinton and Barack Obama won reelection, the S&P 500 was up 26.3%, 31.0% and 29.6%, respectively, over the following year.
However, those who want to try to generate additional returns by front-running the election should know that the prospective winners under a second Trump administration are a very different mix than those that might shine with Biden in office.
Read on as we take a look at 13 of the best stocks to buy for the re-election of President Donald Trump. Or, you can also learn more about the best stocks to buy if Joe Biden wins the election.
Data is as of Oct. 26. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
Bank of America
- Market value: $212.6 billion
- Dividend yield: 2.9%
We'll start with Bank of America (BAC, $24.54), one of the Big Four financial stocks.
Republican administrations have traditionally been friendlier to large banks than Democratic ones. And Trump's slashing of corporate tax rates in the Tax Cuts and Jobs Act was particularly beneficial to banks.
"Wall Street veterans Larry Fink and Lloyd Blankfein, along with presumptive Democratic Presidential nominee Joe Biden, have suggested deficit-reducing increases in corporate tax rates," write Keefe, Bruyette & Woods analysts. By KBW's estimate, raising the corporate tax rate to Biden's suggested 28% levels would reduce earnings per share by about 8% for the sector, and by more than 9% for Bank of America specifically.
Now, a 9% bite out of profits per share isn't catastrophic. But it does mean less cash available for dividends, and presumably, it would slow share price growth. So, BofA likely would respond well to a Trump presidential victory.
Beyond the election, Bank of America isn't a bad-looking stock at current prices. It yields a full 3% in dividends, and Warren Buffett recently topped up his already-large investment in BAC with an additional purchase of $800 million in BAC stock.
- Market value: $308.6 billion
- Dividend yield: 3.6%
JPMorgan Chase (JPM, $101.24) would be another likely winner from a Trump victory, but let's be clear: This is a high-quality, attractively priced mega-bank with a solid dividend yield that should fare well no matter what the presidential elections bring.
But JPM would appear to benefit more from a Trump administration than a Biden one. For one, by Keefe, Bruyette & Woods' estimates, the corporate tax rate alone would account for a 4.1% difference in JPMorgan's earnings per share.
The argument goes beyond tax rates. Research by Piper Sandler found that "the broader market performed on average slightly better under Democratic administrations" in the first six months after an election. "However, bank stocks performed significantly better under Republican administrations."
As a general rule, Republican administrations are less likely than Democratic administrations to issue stricter banking regulations. This matters because, following the COVID-19 economic upheaval, the next president will be in a position to address consumer bankruptcy protections and a host of other issues.
New York Times Co.
- Market value: $6.9 billion
- Dividend yield: 0.6%
There is no love lost between President Trump and the New York Times Company (NYT, $41.17). The "Gray Lady" has been critical of Trump since early in his 2016 campaign, and Trump has responded by branding the paper as "fake news."
So, it might seem strange to suggest that the New York Times benefits from four more years of Trump. But, as was the case with Twitter, Facebook and other social media firms, Trump needs the media as much as they need him. The outrage cycle keeps readers returning to see the newest, most outrageous headline, and the constant media attention keeps Trump relevant.
Without the constant drama coming out of the Trump White House, news consumption in general could die down, which in turn could provide advertisers with less incentive to pay top dollar.
Longer term, the New York Times faces the same competitive pressures that all news media outlets face. It's hard to make money when your readers are accustomed to getting your content for free. It has been a brutal 20 years for traditional print media, and the coming years aren't going to get any easier, though NYT admittedly has done a better job than most about transitioning readers to paid subscriptions.
But all of that said, one candidate is clearly better than the other in generating hype and buzz, and that makes the NYT one of the best stocks to buy for another four years of President Trump.
- Market value: $1.61 trillion
- Dividend yield: N/A
This pick might be counterintuitive given the bad blood between Donald Trump and Amazon.com (AMZN, $3,207.04) founder Jeff Bezos, but Amazon certainly could benefit from Trump remaining in the White House.
Bezos owns the Washington Post, which has generally been critical of the Trump presidency, provoking the commander in chief's ire and Twitter rage. Conversely, Trump routinely bashes Amazon and has suggested that the U.S. Postal Service should double the rates that Amazon pays.
But while Trump talks tough, his administration hasn't been in a hurry to actually do anything to Amazon. And attacking the company via the USPS would seem like a long shot.
Meanwhile, Amazon has been struggling with labor unrest for years and complaints of harsh working conditions. This only got worse during the COVID-19 pandemic as some workers complained of unsafe working conditions.
A Republican administration would be less likely to side with unionization efforts, as well as to interfere in the company's business on antitrust grounds.
Of course, even under a Biden presidency, it's hard to imagine the Amazon juggernaut slowing much. But a Trump presidency would favor the company, even if it doesn't seem that way at first blush.
- Market value: $141.0 billion
- Dividend yield: 10.4%
Energy has been in the doghouse for years, and it's possible we haven't seen the bottom yet. Fundamentally, we're looking at structural oversupply for the foreseeable future. America's frackers were a little too good at their jobs, bringing massive new supplies of crude oil online.
Unfortunately for the industry, demand has been whacked by the COVID-19 pandemic. This is a short-term factor that will eventually pass. But green energy becomes a larger and larger piece of the grid, demand for traditional fossil fuels may never come back as strongly.
The Wells Fargo Investment Institute also says there "may be an analogy between the pandemic and energy policy:
"Plans for a lockdown were developed only partially during the 2006 avian flu by policymakers not anticipating a pandemic anytime soon," the WFII writes. "Now, the wakeup call around the pandemic may prompt analogies to climate change, intensifying the policy debate over fossil fuels."
That's the narrative. But there comes a point when a stock is too cheap to ignore, and we might be at that point in Exxon Mobil (XOM, $33.35). XOM is trading at prices last seen in the early 2000s and sports a dividend yield of nearly 10%.
Realistically, fossil fuels will not be a major growth industry again any time soon. It might never be again. But as we've seen with tobacco stocks, industries in a gentle decline can make solid investments if bought at the right prices.
A Trump administration would not reverse the trends affecting energy prices. That's likely beyond the power of any president. But it would be less hostile to the sector and less likely to slap it with new taxes or regulations.
"We expect a second Trump administration to look for ways to further deregulate or otherwise encourage fossil fuel production. Fundamentally different policies from a Biden White House would push for higher carbon controls, strict limits on coal mining, and reduced fracking."
A more laissez-faire approach would make Exxon Mobil among the best stocks to buy for four more years of President Donald Trump.
- Market value: $38.8 billion
- Dividend yield: N/A
President Donald Trump has something of a love-hate relationship with social media leader Twitter (TWTR, $49.00). He fumes when his tweets get flagged as being factually untrue and regularly criticizes the platform for allegedly silencing conservative voices. Yet he still favors the platform as his primary medium for communication, mostly bypassing the traditional media.
The dirty little secret is that Twitter needs President Trump as much as he needs Twitter.
Prior to the 2016 election, Twitter was very much an also-ran in social media. But the constant controversy coming out of the president's tweetstorms made the platform relevant. So much of the news cycle stems directly from his tweets and from the reactions to his tweets by others, and this has expanded to other politicians, celebrities and people of note.
This keeps eyeballs returning to the site, which in turn justifies the advertising spending that pays Twitter's bills.
As a practical matter, a Biden presidency would make Twitter far less relevant. Biden is unlikely to rule by tweet. A Democratic administration also would be more likely to force the site to crack down on controversial posts or to accuse the site of facilitating hate speech.
Longer term, there are serious political issues regarding Twitter and other social media platforms that will have to be worked out. First Amendment protections will need to be balanced against concerns about hate speech and fake news. That promises to be messy and might force changes in Twitter's business plan. But in the short-term, the constant noise of the Tweeter-in-chief should be good for Twitter's bottom line.
- Market value: $789.4 billion
- Dividend yield: N/A
Along the same lines, social media giant Facebook (FB, $277.11) should benefit from another four years of Trump in the White House.
Like Twitter, Facebook tends to take abuse from all sides. To those on the left, Facebook is a forum for fake news and disinformation. To the right, Facebook represents the thought police, effectively censoring many right-wing voices.
To some extent, both criticisms have some merit. At the very least, Facebook is guilty of perpetuating the echo chamber effect in which users only interact with like-minded people and read curated content they're likely to agree with.
Social media probably will come under real regulatory scrutiny at some point. Former presidential candidate Elizabeth Warren already made it her goal to break the company up, and she could potentially serve as a cabinet secretary in a Biden administration.
Harsh new regulation is unlikely to come under a Trump presidency. After all, the 2016 Trump campaign ran what arguably was the most successful Facebook marketing campaign in history. It went a long way to delivering him the presidency.
Furthermore, the more riled up people are about politics, the more they're likely to continue reading political feeds on Facebook, meaning more ad revenue for FB. So, while President Trump bashes Facebook publicly, make no mistake: A second Trump administration won't lay a finger on the on the company.
- Market value: $1.08 trillion
- Dividend yield: N/A
This stock also might seem a little controversial given that the Trump Administration literally just filed an antitrust suit against the company. However, Google's parent Alphabet (GOOGL, $1,584.29) still should benefit from four more years of the Donald in office.
In October, 11 states and the U.S. Justice Department filed a suit alleging that the company abuses its monopoly power in search to stifle competition. Google's search engine enjoys an 87% share of the U.S. market.
The suit was a long time coming. The U.S. government has a long history of going after tech companies that it believes have simply become too big or too powerful, such as International Business Machines (IBM) in the 1980s and Microsoft (MSFT) in the 1990s.
But remember: Republican administrations tend to be more sympathetic to business and tend to take a more laissez-faire approach to regulation. And the Democrats have made taming Big Tech a major policy priority. It's highly likely that an incoming Biden administration would not only continue Trump's antitrust suit, but could potentially expand it into a far broader and more sweeping regulatory overhaul.
We'll see. It's unclear how exactly the government would be able to break up Google's monopoly; you can't force users to choose another search engine. But it's clear that Alphabet will be a political punching bag for a long time to come. It just so happens that a Biden administration will likely have a far more wicked uppercut than a Trump one.
- Market value: $103.1 billion
- Dividend yield: 2.8%
Defense and aerospace companies tend to do well under Republican administrations because strong military spending tends to be a Republican priority.
This might hold less true over the next four years. That's because regardless of who takes the White House, the focus is likely to be normalizing the economy after the upheaval of the COVID-19 pandemic. But all else equal, a Republican administration likely means more defense spending than a Democratic administration.
This brings us to Lockheed Martin (LMT, $368.55), maker of Black Hawk helicopters, F-16 Fighting Falcon jets and the Orion spacecraft.
Lockheed didn't perform particularly well during the Clinton years, but it enjoyed a nice run during George W. Bush administration. Having two major wars certainly helped. The shares stagnated in the first half of Barack Obama's presidency, though they enjoyed a nice string of positive years during Obama's second term.
This aerospace and defense blue chip has done well during the Trump presidency, rising by about half since Election Day 2016. LMT shares remain reasonably priced at 14 times next year's earnings estimates, which is less than its average over the past year. The shares also yield a respectable 2.8% in dividends.
Lockheed is a survivor and should do just fine regardless of who wins in November. But given the company's history, expect it to be among the better stocks to buy under a Trump presidency.
- Market value: $1.0 billion
- Dividend yield: 15.8%
Certain sectors of the stock market are probably best not discussed in polite company. Prison real estate firms are one of them.
While every civilized society needs a functioning criminal justice system, including prisons, there's something about making a for-profit business out of it that seems a little distasteful to some people. And that perception is more important than you might think. The rising popularity of environmental, social and governance (ESG) investing is a risk factor for certain companies, as exclusion from funds with ESG standards can limit the pool of prospective investors and therefore the value of the stock.
This brings us to The GEO Group (GEO, $8.63), one of the largest publicly traded prison landlords.
Joe Biden has pledged to end the use of private prisons at the federal level, and others in his party have taken the sentiment further. Elizabeth Warren went so far as to pledge to withhold federal funding from states that use private prisons.
It's possible that GEO and other private prison operators could work out a deal with a Biden administration to build and lease prisons that the government in turn operated. But you'd still have the potential issue of a shrinking prison population, as a Biden administration might be much more lenient on petty and nonviolent drug-related crime.
The possibility of a Biden win is one reason why GEO trades at a gargantuan dividend yield of nearly 16%, even after it cut its October payout by 29%. But if President Trump manages to pull off a second term, Geo Group might be one of the best stocks to buy for a rapid rebound.
- Market value: $402.8 billion
- Dividend yield: 1.5%
Walmart (WMT, $142.16), the world's largest retailer, is doing just fine throughout the COVID-19 crisis. Unlike many other retailers, which were forced to close, Walmart was considered an essential business and allowed to stay open.
But Walmart's outperformance isn't just a post-COVID phenomenon. Walmart has been aggressively building out its e-commerce presence, including online grocery ordering, pickup and delivery. While Amazon.com is still the undisputed leader in modern retail, Walmart is the only retailer that can credibly compete with Amazon at any real scale.
Furthermore, with the economy in bad shape and unemployment at levels previously thought unimaginable, consumers likely will be trading down for the next several years to discount retailers like Walmart.
All of these trends were in place long before the election was on anyone's mind, and all will continue regardless of who takes the White House in November. But a Trump presidency should be a better scenario for the Bentonville giant due to its more relaxed stances on labor issues. You're less likely to see a hike to the federal minimum wage or a push to unionize or provide more generous health benefits under a Trump administration.
As the largest private employer in America, that's a big deal.
- Market value: $560.2 million
- Dividend yield: N/A
Some industries just can't be saved. When the automobile reached the mass-production stage, the eventual death of the horse buggy manufacturers was an inevitability.
It's not quite that bad for the American coal industry, but it's not far. Coal has been in the crosshairs of environmental activists for decades, and falling prices for natural gas (and more recently wind and solar energy) have massively reduced the need for coal production.
That said, the Trump administration is the most coal-friendly administration in memory, and Trump is extremely unlikely to hasten the industry's demise.
This brings us to Arch Resources (ARCH, $36.98), a major producer of both thermal and metallurgical coal.
There is an important distinction here. Thermal coal is used for heating, whereas metallurgical coal is used in the production of steel. Both of these types of coal raise the ire of environmentalists, but it's thermal coal that tends to come under the heaviest fire because it can generally be replaced with greener alternatives. This will be less of a problem for Arch longer-term, as the company recently announced plans to begin winding down its thermal-coal operations ... a month after it said it would try to sell that business.
However, with present technology, there's really no way to produce steel without metallurgical coal.
So, at least for the time being, there will still be demand for coal regardless of who wins the election. But it's clear that Trump would make life easier on coal producers like Arch than a Biden administration would.
VanEck Vectors Russia ETF
- Assets under management: $1.0 billion
- Dividend yield: 6.8%
- Expenses: 0.67%, or $67 annually for every $10,000 invested
This final pick – VanEck Vectors Russia ETF (RSX, $21.04) – will no doubt sound controversial to some.
Tensions with Russia have been a defining characteristic of the last three presidential administrations. George W. Bush had a falling out with Russian President Vladimir Putin over the Iraq War, Ukrainian politics and the Russia-Georgia conflict. Barack Obama tried to "hit the reset button," but relations never really improved and actually worsened due to the conflict in Syria.
Then came the allegations that Russia tampered in the 2016 election, helping to get Trump elected. And more recently, there were allegations that Russia put a bounty on U.S. troops in Afghanistan.
Suffice it to say, there's not a lot of trust between Russia and the West in general and Russia and the U.S. in particular.
But President Trump has generally preferred to give Russia its space and appears to enjoy his working relationship with Putin. All other things equal, that's a win for Russian equities.
The country's stocks are not for the faint of heart. They tend to be volatile and have major exposure to fossil fuels. You should be very careful investing in this space. The VanEck Vectors Russia ETF helps you do that somewhat by diversifying your risk across 27 stocks at present.