5 Investing Ideas From Top Dividend-Stock Fund Managers

President-elect Donald Trump's stunning victory caused ripples in markets across the globe.

Hopes that the U.S. president-elect will lower corporate taxes allowing multinationals to repatriate income, as well as push for fiscal-stimulus measures to upgrade U.S.'s infrastructure, has given the U.S. stock market a boost.

Indeed, as of this writing the Dow Jones Industrial Average has risen 5.3% since Trump's win, the broad-stock benchmark S&P 500 index has gained 3.6%, and the Nasdaq Composite has jumped 2.9%.

In particular, the energy, industrials, and financial services sectors have generated double-digit returns since the election--and dividend-paying stocks in these sectors abound.

Where are opportunities today among dividend payers? Here are a few favorite stock picks from three managers running dividend-focused funds.

Clare Hart, who manages the Silver-rated

As the U.S. economy continues to grow, "individuals are going to feel more comfortable taking out credit card loans or mortgages, businesses will feel better about expanding or doing M&A, and so the spread that banks are going to make on their loans is going to be a healthy one," Hart says.

Some banks, in particular, remain undervalued.

"Even after the (market) run since the election, bank valuations are not expensive relative to the market," says Hart. "They have had a good move but there are still more legs to the story."

Wells Fargo is one such undervalued bank. As of this writing, it earns a 4-star rating from Morningstar, which means shares are undervalued relative to Morningstar's estimate of its fair value. Morningstar analyst Jim Sinegal views Wells Fargo's dominant market position as its main structural advantage.

"More than one third of the bank's deposits come from markets in which Wells Fargo is the pre-eminent player, and more than two thirds are gathered in markets in which the company ranks among the top three," Sinegal says. Moreover, the bank's balance sheet exposures are not opaque nor questionable: "Basic consumer and commercial loans and investment securities make up most of its balance sheet assets," he says.

But Exxon Mobil "has the best balance sheet that can weather the volatility that has been going on for the past two years," Hart says. "It is a very diverse company. They have a refining business and it owns reserves on the ground, so it captures most part of the value chain while making money throughout."

Morningstar strategist Allen Good says Exxon is the highest-quality integrated firm that Morningstar covers.

"ExxonMobil has historically set itself apart from the other majors as a superior capital allocator and operator, delivering higher returns on capital relative to peers as a result," he writes in his latest report. That said, shares are currently trading in 2-star range, suggesting that they’re overpriced according to Morningstar.

Thomas Huber, longtime manager of the Silver-rated

"Our largest industry weight is in healthcare equipment and supplies, including Becton Dickinson & Company," Huber said in the fund's quarterly review.

Like Huber, Morningstar analyst Alex Morozov sees plenty to like about the narrow-moat company.

"Across the firm, we are seeing the effects of significant R&D investments, with BD's pipeline the strongest it's been in our history of covering the firm,” writes Morozov in his latest Stock Analyst Note. As a result, Morningstar recently increased its fair value estimate of the stock to $186. As of this writing, shares are trading in 4-star range.

Ramona Persaud, who has managed the Neutral-rated

is a compelling pick. Dividends in financials, certainly in banks, tend to be cyclical, and the best time to buy them is when dividends are depressed but increasing, Persaud says.

"I put Bank of America in the fund because banks were coming out of the financial crisis with earnings that were improving due to a recovery in margins and in credit costs as well as reductions in legal and regulatory costs," said Persaud. "Those fundamentals have been driving and improving net income, capital, and the company's ability to give capital back in the form of higher dividends."

Another reason Persaud likes Bank of America and other financials is due to the expectation of higher interest rates in the near future. Investors tend to buy financial stocks when interest rates rise as banks can charge higher interest on their loans and increase their profit.

In his latest analysis, Morningstar's Sinegal, writes: "Bank of America's advantages, ranging from its massive deposit and consumer lending franchise to the 'thundering herd' of Merrill Lynch's brokers and wealth managers, are becoming clear now that the company finally has most of its problems behind it. We see the firm as less complex than many peers and believe B of A is ready to capitalize on its strengths as American consumers continue to recover." The narrow-moat bank currently trades in 3-star range, suggesting that its shares are fairly valued according to Morningstar.

"Their return on capital over time has been really high and therefore the stock traded at 20 to 25 times earnings. I could never buy this stock as it seemed to me too expensive," says Persaud.

But earlier this year L Brands announced it would restructure its business to focus on core categories by eliminating its mail-order catalog, its swimwear business, and lay off employees. The announcement triggered a drop in the stock price.

"For the next year or so they won't have a couple of revenue drivers. This uncertainty has dropped the stock down to 15 to 20 times earnings," Persaud says. "So I wait for companies with a valuation like this one that is reflective of a transitory and not permanent issue."

Like Persaud, Morningstar senior analyst Bridget Weishaar expects tempered performance from LBrands in the short term, but thinks the long-term story is intact.

"In the long term however, the company possesses a wide economic moat, with pricing power, brand loyalty, and some barriers to entry coming with the unique characteristics of the intimate apparel space," Weishaar says. "We view recent strategic efforts as leaving the company even better-positioned to focus on its core strengths and increase return on investment," she concludes. As of this writing, shares are trading in 3-star range.

Manuela Badawy is a freelance columnist for Morningstar.com. The views expressed in this article do not necessarily reflect the views of Morningstar.com.