The economic sanctions on Russia have contributed to rising crude oil and commodity prices and stock market volatility. And surging inflation is driving a significant downturn in the stock market again, following a brief correction in March. According to a Labor Department forecast, U.S. inflation hit a new 40-year record in March; the U.S. consumer prices jumped 8.5% year-over-year. Furthermore, the Fed's tighter monetary policy to combat inflation, surging U.S. Treasury bond yields, deepening supply chain issues owing to the Russia-Ukraine war, and resurgence of COVID-19 cases across different countries are adding to the market’s volatility. This is evident in the CBOE Volatility index's 17.8% gains year-to-date.
Amid the heightened market volatility, dividend stocks are considered solid investments because they can potentially hedge against market fluctuations and help generate a regular portfolio income stream. Investors' interest in dividend stocks is evidenced by iShares Core High Dividend ETF's (HDV) 13.6% gains over the past year.
To dodge market volatility, we think it could be wise to invest in quality dividend stocks Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK), Fresenius Medical Care AG & Co. KGaA (FMS), and National HealthCare Corporation (NHC).
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK)
Headquartered in Bandung, Indonesia, TLK provides telecommunications, informatics, and network services worldwide. The company operates through five segments: Mobile; Consumer; Enterprise; Wholesale and International Business; and Others. It offers mobile broadband, digital, enterprise-grade connectivity, infrastructure, e-commerce, and property management services.
Last August, TLK partnered with PT Microsoft Indonesia, a subsidiary of Microsoft Corporation (MSFT), to accelerate the digital transformation process and create digital sovereignty to empower Indonesia's digital economy. It will cover building intelligent infrastructure, developing digital, and accelerating TLK's digital transformation. This collaboration might strengthen TLK's capability to provide different digital services, platforms, and connectivity and boost its profitability.
In its fiscal year 2021, ended Dec. 31, 2021, TLK's revenues increased 4.9% year-over-year to Rp143.21 trillion ($9.97 billion). Its operating profit improved 9.3% from the prior year to Rp47.56 trillion ($3.31 billion). The company's profit rose 14.8% year-over-year to Rp33.95 trillion ($2.36 billion). Its total comprehensive income for the year grew 38.3% from the last year to Rp35.93 trillion ($2.50 billion), while its net income per share grew 19% year-over-year to Rp249.94.
TLK pays $0.87 as dividends annually, yielding 2.63% on its current share price. Its four-year average yield is 4.5%, and its dividend payouts have grown at an 8.3% CAGR over the past five years.
The stock gained 13.5% in price year-to-date and 43.8% over the past year. It closed yesterday's trading session at $32.91.
TLK's POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
TLK has a grade of A for Stability and B for Sentiment, Growth, and Quality. Within the A-rated Telecom - Foreign industry, it is ranked #14 of 47 stocks.
To see additional POWR Ratings (Value and Momentum) for TLK, click here.
Fresenius Medical Care AG & Co. KGaA (FMS)
FMS offers dialysis care and related dialysis care services in Germany, North America, and internationally. It is headquartered in Bad Homburg, Germany. The company provides dialysis treatment, related laboratory, and diagnosis services. It also develops, manufactures, and sells dialysis products and non-dialysis products. FMS sells its products to dialysis clinics, hospitals, and specialized treatment clinics.
In November, FMS unveiled intelligent home dialysis solutions at Shanghai's China International Import Expo (CIIE). The company presented new digitalized options that enable patients with end-stage kidney disease to perform dialysis in their homes, including the 5008S hemodialysis (HD) machine and a new automated peritoneal dialysis (APD) machine. These developments are expected to expand the company's market reach and accelerate the business.
FMS' revenue increased 5.6% year-over-year to €4.65 billion ($5.02 billion) in its fiscal year 2021 fourth quarter, ended Dec. 31, 2021. Its income before taxes grew marginally year-over-year to €382 million ($412.06 million). The company's net income and earnings per share came in at €229 million ($247.02 million) and €0.78, respectively, registering an increase of 29.1% and 19%, respectively, from the prior-year period.
Over the past five years, FMS dividend payouts have grown at a 27.7% CAGR. Its four-year average yield is 1.8%, while its current dividend translates to a 2.5% yield.
Analysts expect FMS' revenue for its fiscal year 2022, ending Dec. 31, 2022, to come in at $20.75 billion, representing a 3.8% rise year-over-year. The Street expects the company's EPS for the current year to come in at $2.06, representing a 9.5% increase year-over-year.
Shares of FMS have increased 3.7% in price year-to-date and closed yesterday's trading session at $33.66.
FMS' strong fundamentals are reflected in its POWR Ratings. The stock has an overall B grade, which translates to Buy in our proprietary rating system.
FMS has a grade of A for Stability and B for Value and Quality. Within the Medical - Services industry, it is ranked #13 of 83 stocks.
To see additional POWR Ratings (Growth, Momentum, and Sentiment) for FMS, click here.
Click here to checkout our Healthcare Sector Report for 2022
National HealthCare Corporation (NHC)
NHC provides services to nursing facilities, independent living facilities, assisted living facilities, home care agencies, and behavioral health hospitals. The Murfreesboro, Tenn., company offers licensed therapy, nutrition, medical, and rehabilitative services. In addition, it provides behavioral health services and health care programs that provide skilled services.
On February 18, NHC expanded its behavioral health service line. Currently, the company provides behavioral health services at the Osage Beach Center for Cognitive Disorders. This year, NHC will open two new behavioral health hospitals in Knoxville, Tenn., and Maryland Heights, Mo. This expansion might accelerate the company's growth and boost its revenue streams.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, NHC's net operating revenues and grant income increased 9.1% year-over-year to $283.45 million. The company's net income improved 14.3% from the prior-year period to $15.80 million. And its earnings per share rose 13.3% from the year-ago period to $1.02.
Over the last five years, NHC's dividend payout has grown at a 3.5% CAGR. Its four-year average dividend yield is 2.8%. NHC pays $2.20 as dividends annually, yielding 3.1% at its current share price.
The stock’s price has improved 6.6% year-to-date and 8.6% over the past three months. It closed yesterday's trading session at $72.39.
NHC's POWR Ratings reflect a strong outlook. The stock has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
NHC has a grade of A for Stability and Growth. It has a grade of B for Sentiment and Value. It is ranked #5 of 83 stocks in the Medical Services industry.
Click here to see NHC's POWR Ratings for Momentum and Quality.
Click here to checkout our Healthcare Sector Report for 2022
TLK shares were trading at $32.42 per share on Wednesday afternoon, down $0.49 (-1.49%). Year-to-date, TLK has gained 11.83%, versus a -6.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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