According to the Bureau of Labor Statistics, the consumer price index increased 8.3% in April, exceeding Dow Jones’ 8.1% estimate. Fed Chair Jerome Powell stated that the Fed is determined to implement aggressive interest rate hikes until inflationary pressure comes down. These factors, coupled with the Russia-Ukraine war, have contributed significantly to heightened stock market volatility. This is evident in the CBOE Volatility index's 72.1% gains year-to-date.
Furthermore, Goldman Sachs economists have set the odds of a recession at 35% within the next two years. Amid the current scenario, high-yielding dividend stocks are considered attractive investments because they help hedge one’s portfolio against market fluctuations and generate a regular income stream. Investors’ interest in dividend stocks is evidenced by iShares Core High Dividend ETF’s (HDV) 7.3% gains over the past six months.
Therefore, to sidestep elevated market volatility, we think it could be wise to bet on reliable dividend stocks Nucor Corporation (NUE), Emerson Electric Co. (EMR), Sysco Corporation (SYY), Genuine Parts Company (GPC), and Becton, Dickinson, and Company (BDX). These companies have a history of increasing their dividends.
Nucor Corporation (NUE)
NUE in Charlotte, N.C., manufactures and sells steel and steel products. The company operates through three segments: Steel Mills; Steel Products; and Raw Materials. Its Steel Mills segment produces hot-rolled, cold-rolled, sheet piling products, plate steel products, and bar steel products. Its Steel Products segment provides hollow structural section steel tubing products, cold finished steel products, and wire and wire mesh products. Its Raw Materials segment produces direct reduced iron (DRI) and brokers ferrous and nonferrous metals.
On May 16, NUE agreed with an affiliate of investment funds managed by Kohlberg Kravis Roberts & Co. L.P. to acquire C.H.I. Overhead Doors, a manufacturer of overhead doors for residential and commercial markets in the U.S. and Canada. The acquisition is expected to expand the company’s diverse range of businesses to the construction and infrastructure markets and boost profitability.
Last month, NUE acquired Elite Storage Solutions, a steel racking manufacturer, for $75 million. “We are excited to grow our steel racking capabilities with this acquisition of Elite Storage Solutions. Establishing a manufacturing presence in the southeast complements our existing steel racking business and allows us to serve our racking customers nationwide more efficiently,” said Giff Daughtridge, President of Sheet and Tubular Products.
In its fiscal 2022 first quarter, ended April 2, 2022, NUE's net sales increased 49.5% year-over-year to $10.49 billion. Its earnings before income taxes and noncontrolling interests grew 123.2% year-over-year to $2.80 billion. The company's net earnings rose 125.5% year-over-year to $2.23 billion. Its net earnings attributable to NUE stockholders and net earnings per share came in at $2.10 billion and $7.67, respectively, registering an increase of 122.4% and 147.4% from the prior-year period.
NUE pays $2.00 as dividends annually, yielding 1.67% on the current price. The company’s dividends have increased at a 5.1% CAGR over the past three years and 3.8% over the past five years.
Analysts expect NUE’s EPS to grow 62.6% year-over-year to $8.42 for its fiscal 2022 second quarter, ending June 2022. It is no surprise that it has surpassed the consensus EPS estimates in three of the trailing four quarters. The current quarter's $11.79 billion consensus revenue estimate represents a 34.1% rise from the prior-year period.
The stock has gained 11.7% in price year-to-date and 22.2% over the past year and closed yesterday's trading session at $126.31.
NUE's POWR Ratings reflect this promising outlook. It has an overall B grade, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
NUE has a B grade for Growth, Momentum, and Quality. Within the A-rated Steel industry, it is ranked #12 of 33 stocks. To see additional POWR Ratings (Value, Stability, and Sentiment) for NUE, click here.
Emerson Electric Co. (EMR)
EMR in Ferguson, Mo., manufactures and sells technology and engineering products for industrial, commercial, and consumer markets worldwide. The company operates through Automation Solutions; and Commercial & Residential Solutions. Its Commercial & Residential Solutions segment provides residential and commercial heating and air conditioning products. In addition, it offers air conditioning, refrigeration, and lighting control technologies.
In February, EMR was selected by HITA, a deep geothermal energy company in Belgium, for geothermal clean energy production. EMR’s geological and reservoir modeling software will help HITA identify drilling locations for renewable geothermal energy projects by creating highly realistic models. This collaboration is expected to boost the company’s revenues.
In January, EMR introduced Rosemount 1408H Level Transmitter, the world’s first non-contacting radar level transmitter designed especially for food and beverage applications. The new radar device has dedicated features, including a hygienic compact design, fast sweep technology, radar beam focusing, and IO-Link communications. The launch might boost the company’s market reach and profitability.
In its fiscal 2022 second quarter, ended March 31, 2022, EMR's net sales grew 8.1% year-over-year to $4.79 billion, while its sales from the Commercial & Residential Solutions segment improved 12.9% from its year-ago value to $1.86 billion. The company's earnings before income taxes rose 52.8% year-over-year to $1.99 billion. Its net earnings and earnings per common share came in at $1.57 billion and $2.63, respectively, registering an increase of 53.9% and 57.5% from the prior-year period.
EMR pays $2.06 as dividends annually, yielding 2.46% on its current share price. Its four-year average dividend yield translates to 2.70%. In addition, the company’s dividends have increased at a 1.6% CAGR over the past three years and 1.4% over the past five years.
The $5.09 billion consensus revenue estimate for the fiscal year 2022, third quarter, ending June 30, 2022, represents an 8.4% increase from the prior-year period. The $1.29 consensus EPS estimate for the current quarter indicates an 18.2% year-over-year rise. Furthermore, it has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has declined 6.4% in price over the past month and closed yesterday's trading session at $84.97.
EMR's POWR Ratings reflect this strong outlook. It has an overall B grade, which equates to Buy in our proprietary rating system.
EMR has a B grade for Stability, Sentiment, and Quality. Within the Industrial - Equipment industry, it is ranked #19 of 93 stocks. To see additional POWR Ratings (Value, Momentum, and Growth) for EMR, click here.
Click here to check out our Industrial Sector Report for 2022
Sysco Corporation (SYY)
Houston, Tex.-based SYY markets and distributes various food and related products in the United States, Canada, the United Kingdom, France, and internationally. The company operates through four segments: U.S. Foodservice Operations; International Foodservice Operations; SYGMA; and Other. It serves restaurants, hospitals, and nursing homes, hotels and motels, schools and colleges, industrial caterers, and other food service venues. SYY operates more than 245 distribution facilities.
On April 28, SYY’s board of directors approved a two cent ($0.02) increase in the quarterly cash dividend to $0.49 per share, payable on July 22. “Our Board’s decision today to increase the dividend demonstrates the importance of shareholder returns as part of our balanced capital allocation strategy. This increase, effectively $0.08 per share on an annual basis for fiscal year 2023, again demonstrates our confidence in our Recipe for Growth strategy,” said Aaron Alt, SYY’s chief financial officer.
SYY's sales increased 42.9% year-over-year to $16.90 billion in its fiscal 2022 third quarter, ended April 2, 2022. Its non-GAAP gross profit rose 43.4% year-over-year to $3 billion. Its non-GAAP operating income improved 124.6% year-over-year to $575.40 million. And its adjusted EBITDA grew 72.8% from the year-ago value to $755.80 million. In addition, the company’s non-GAAP net earnings and non-GAAP EPS came in at $362.90 million and $0.71, respectively, registering an increase of 216.1% and 222.7% year-over-year.
SYY’s dividend pay-outs have grown at a 7.8% CAGR over the past three years and 8% over the past five years. While its four-year average dividend yield is 2.37%, its current dividend translates to a 2.55% yield.
Analysts expect SYY’s EPS to grow 57.1% year-over-year to $1.12 for its fiscal 2022 fourth quarter, ending June 30, 2022. The $18.26 billion consensus revenue estimate for the current quarter represents a 13.1% rise from the same period in 2021. The company has topped the consensus revenue estimates in each of the trailing four quarters.
SYY’s shares have increased 2.7% over the past six months and closed yesterday’s trading session at $78.59.
SYY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which equates to a Strong Buy in our proprietary rating system.
SYY has an A grade for Growth and a B for Value and Sentiment. Within the B-rated Food Makers industry, it is ranked #6 of 86 stocks. To see additional POWR Ratings (Stability, Quality, and Momentum) for SYY, click here.
Genuine Parts Company (GPC)
GPC in Atlanta, Ga., distributes and sells automotive replacement parts and industrial parts and materials. The company operates through two segments: Automotive Parts Group; and Industrial Parts Group. It provides automotive replacement parts for hybrid and electric vehicles, SUVs, trucks, buses, motorcycles, farm vehicles, farm equipment, and heavy-duty equipment. It also distributes industrial replacement parts, such as bearings, mechanical and electrical power transmission products, and industrial safety supplies.
Last month, GPC’s Alliance Automotive Group (AAG), the company’s wholly-owned automotive distribution company based in London, acquired Lausan Group. Lausan is a leading distributor of automotive aftermarket parts in Spain and Portugal and serves its customers from an established network. The company expects Lausan to generate annual revenue of nearly €115 million ($125 million). The acquisition is expected to expand the company’s European automotive footprint and boost its growth.
In February, GPC announced that the board of directors increased the cash dividend by 10% to an annual rate of $3.58 per share compared with its previous dividend of $3.26 per share. 2022 marks the 66th consecutive year of increased dividends by GPC. This dividend increase reflects the company’s strong financial position and its commitment to delivering value to shareholders.
GPC's net sales increased 18.6% year-over-year to $5.29 billion in its fiscal 2022 first quarter, ended March 31, 2022. Its adjusted gross profit improved 18.9% year-over-year to $1.83 billion. Its adjusted EBIT grew 22.1% year-over-year to $371.48 million, and its adjusted EBITDA rose 21.9% year-over-year to $458.85 million. The company’s adjusted net income and adjusted net income per common share came in at $265.65 million and $1.86, respectively, indicating an increase of 22% and 24% from the prior-year period.
GPC’s dividend pay-outs have grown at a 4.6% CAGR over the past three years and 4.8% over the past five years. Its current dividend translates to a 2.79% yield, while its four-year average dividend yield translates to 2.98%.
The $5.30 billion consensus revenue estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents a 10.8% improvement from the same period last year. Analysts expect GPC’s EPS for the same quarter to increase 16.2% year-over-year to $2.02. The company has an impressive revenue and earnings history; it has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has declined marginally over the past month and closed yesterday’s trading session at $129.64.
GPC’s POWR Ratings reflect a strong outlook. The stock has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
GPC has a B grade for Stability, Sentiment, Quality, and Growth. It is ranked #2 of 69 stocks in the Auto Parts industry. Click here to see GPC’s POWR Ratings for Value and Momentum.
Becton, Dickinson and Company (BDX)
BDX is a global medical technology company. The Franklin Lakes, N.J.-based company operates in three segments: BD Medical; BD Life Sciences; and BD Interventional. It develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide. BDX serves healthcare institutions, physicians, clinical laboratories, life science researchers, the pharmaceutical industry, and the general public worldwide.
BDX launched its new, fully automated, high-throughput infectious disease molecular diagnostics platform this month. The BD COR™ MX/PX System integrates and automates the molecular laboratory workflow, from sample processing to diagnostic test results for high throughput labs. The system is capable of loading 1,700 specimens, with onboard capacity for reagents and samples, and delivering up to 1,000 sample results in 24 hours. This launch might boost the company’s growth and profitability.
In its fiscal 2022 second quarter, ended March 31, 2022, BDX's revenues grew 2.1% year-over-year to $5.01 billion. Its operating income increased 50.1% year-over-year to $652 million. Its income before income taxes improved 72.2% from its year-ago value to $525 million. The company’s net income and earnings per share amounted to $454 million and $1.50, respectively, registering a rise of 51.7% and 59.6% year-over-year.
BDX pays $3.48 as dividends annually, yielding 1.38% on its current stock price. The company’s dividends have increased at a 3.8% CAGR over the past three years and 4.1% over the past five years.
The $19.40 billion consensus revenue estimate for its fiscal year 2023, ending Sept.30, 2023, represents 3.5% growth from the prior-year period. Also, the $12.27 consensus EPS estimate for the same year represents a 7.6% rise from the previous year. Also, BDX has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has increased 6.9% in price over the past six months and 8.2% over the past year. It closed yesterday’s trading session at $257.00.
BDX's POWR Ratings reflect a promising outlook. The stock has an overall B grade, which equates to Buy in our proprietary rating system.
BDX has a B grade for Growth and Stability. Within the Medical - Devices & Equipment industry, it is ranked #28 of 150 stocks. To see additional POWR Ratings (Momentum, Value, Quality, and Sentiment) for BDX, click here.
Click here to checkout our Healthcare Sector Report for 2022
NUE shares were trading at $122.81 per share on Tuesday afternoon, down $3.50 (-2.77%). Year-to-date, NUE has gained 7.94%, versus a -17.33% 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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