From an investing standpoint, the gains on the Trump-based investments will likely be large because there is more surprise fueling those positions.

One of the most obvious Trump trades is by default. Trump has aggressive plans for health care in general. This will benefit SPDR S&P Biotech ETF (XBI), which has appreciated 20.36% over the past 12 months and currently offers a dividend yield of 0.48%.

Trump wants to invest in infrastructure, put more bad guys in prison, fight for the Second Amendment, launch aggressive campaigns against enemies, build a wall between the United States and Mexico, make it easier for domestic companies to repatriate cash to the U.S., and fight for oil.

This would all likely be good news for Trinity Industries Inc. (TRN), Caterpillar Inc. (CAT), Quanta Services, Inc. (PWR), Granite Construction Incorporated (GVA), The GEO Group, Inc. (GEO), American Outdoor Brands Corporation (AOBC), Sturm, Ruger & Co. Inc. (RGR), Lockheed Martin Corporation (LMT), L-3 Communications Holdings Inc. (LLL), United Technologies Corporation (UTX), Raytheon Company (RTN), General Dynamics Corporation (GD), and The Boeing Company (BA).

The chart below provides a quick glance at 1-year stock performance and currently dividend yields for the stocks mentioned above.

1-Year Stock Performance

Dividend Yield

TRN

50.37%

1.60%

CAT

58.19%

3.30%

PWR

96.41%

N/A

GVA

43.42%

0.94%

GEO

41.23%

6.63%

AOBC

0.30%

N/A

RGR

-2.33%

2.63%

LMT

19.39%

2.87%

LLL

38.26%

1.89%

UTX

29.90%

2.39%

RTN

21.51%

1.99%

GD

39.59%

1.73%

BA

26.13%

3.59%

If you would prefer a diversified approach for infrastructure, then consider iShares Global Infrastructure (IGF), which has appreciated 17.12% over the past 12 months and currently offers a dividend yield of 2.94%.

If you prefer a diversified approach to defense, then you might want to look into iShares US Aerospace & Defense (ITA), which has appreciated 30.84% over the past 12 months and currently offers a dividend yield of 1.22%.

Stay Away

Trump has repeatedly announced that he will place a 35% tax on any Ford Motor Co. (F) cars that were manufactured in Mexico and are then sold in the U.S. Trump has been calling out Ford again and again, which would likely equate to Ford being a risky investment during a Trump presidency. F has appreciated 4.02% over the past 12 months and currently offers a dividend yield of 4.83%.

Trump also wants to build a wall between the U.S. and Mexico. This wouldn’t help U.S./Mexico relations and could limit potential for Kansas City Southern (KSU), which ships a lot of goods across the border. KSU has appreciated 28.26% over the past 12 months and currently offers a dividend yield of 1.55%.

The Bottom Line

If you’re betting on a Trump presidency, then you might want to consider biotech, infrastructure, correctional facilities, gun companies, and defense companies. If you don’t want to take on too much risk, then ETFs might be a better option for you. If Trump wins, then you may also want to use caution with Ford and Kansas City Southern. Please do your own research prior to making any investment decisions.

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