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Long live the king of beers, as far as UBS Investment Research is concerned. On Wednesday the firm designated Anheuser-Busch Co. as its top pick in the beverage sector, saying the company is positioned very well for long-term growth as well as benefiting from the potential problems of its competitors.

UBS kept intact its buy rating on the stock with a $58 price target, a level that represents a healthy 25% appreciation from current levels. The firm noted that stock has experienced a 12% decline year-to-date, making for an attractive entry point as the company is poised to generate earnings per share growth that UBS believes will be 10% ahead of guidance.

“We understand that sales and marketing functions are better aligned, advertising decisions are more research-based, and the new key account sales structure is increasing accountability,” UBS said. “We expect 1.5% core brand growth, with help from category strength, easy comps, and innovation.”

The better advertising that reaches out to a wider audience than the company’s core Joe Six-Pack devotees is also helping, according to UBS. It said Bud has improved with a new focus on product quality and heritage, moving beyond what the firm called “male-sports-humor.”

The new focus in advertising is also luring consumers away from the spirits industry which, for a long time, capitalized on the consumer’s thirst (pun intended) for variety and sophistication. And new products like Bud Light with lime are contributing more variety to the market as well, UBS said. Bud should also benefit from potential disruption around the Miller-Coors joint venture, it added, although things seem to be good all over with the beer pricing environment in the U.S. “the strongest it’s been in many years.” The stock is having a flat reaction, however, sliding a dime in late trades.

Increased volatility and multibillion dollar write-downs have kept many investors on the sidelines of the financial sector. And now, dividend cuts from major banks may be the next shoe to drop. At Wachovia, at least, the chance of a dividend decrease is about even, according to Merrill Lynch.

“We now think there is a material chance of an approximate 50% dividend cut in the second half of 2008 or the first half of 2009,” Merrill Lynch said in a note to clients.

The brokerage noted that Wachovia is “saddled” with $5.8 billion in non tax-deductible preferred equity with an 8% interest rate. Merrill Lynch argued that the bank’s first $464 million of annual net earnings will go to preferred equity holders instead of common equity holders and that if Wachovia doesn’t cut its dividend, it will have to generate $5.54 billion in annual net earnings just to service preferred and common dividends.

But is this something banks are willing to do? U.S. banks paid more than $110 billion in cash dividends during 2007, a nearly 18% jump from 2006, according to the Wall Street Journal, which cited data from the Federal Deposit Insurance Corp. ”That cash would have more than covered the roughly $100 billion in credit-related write-downs banks took last year,” the Journal reported.

Those write-downs depleted available capital for banks to cover potential losses and, as a result, banks have had to raise more than $76 billion in fresh capital by issuing preferred or convertible shares with even higher dividend yields than the common stock, the Journal said.

Some big banks did cut their dividends in the fourth quarter, including Citigroup and Freddie Mac, by 40% and 50%, respectively. But is that enough?

Following Federal Reserve Board Vice Chairman Donald Kohn’s comments Tuesday, in which he predicted further loan delinquencies and asset write-downs at major Wall Street banks, investors appeared doubtful. The Financial Select Sector SPDR ETF was down about 2.5% near midday.