With investors fretting about the fate of the global economy amid aggressive interest rate increases, the stock market seems stuck in a vicious loop of volatility. Hence, fundamentally strong stocks with a track record of increasing dividend payouts, Bristol-Myers Squibb (BMY) and CVS Health (CVS), could be considered safe investments for investors aged 50 and above. Continue reading….
Fears of a recession have been mounting, especially since the Federal Reserve announced its third consecutive interest rate hike of 75 basis points. With the PCE inflation index showing that inflation was much stronger than expected in August, further aggressive rate hikes by the central bank are inevitable.
As investors increasingly worry about an uncertain economic outlook, they are liquidating their stocks, and the market seems stuck in a firm bear grip. Moreover, the market selloff is expected to continue in anticipation of businesses falling short of third-quarter earnings estimates.
Zachary Hill, head of portfolio management at Horizon Investments, said, “In the near term, we are likely to have continued market volatility with a downward bias as we head into earnings season.”
Since it seems unlikely that the market will return to stability anytime soon, investors aged 50 and above should opt for stocks that belong to companies operating profitably enough to pay consistent dividends despite uncertain market conditions. To that end, healthcare stock Bristol-Myers Squibb Company (BMY) and CVS Health Corporation (CVS) are solid choices.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, manufactures, and markets biopharmaceutical products globally. It offers solutions for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and Covid-19 diseases.
On September 16, BMY received approval from European Commission for LAG-3-Blocking Antibody Combination, Opdualag (nivolumab and relatlimab), for the treatment of unresectable or metastatic melanoma with tumor cell PD-L1 Expression <1%. This approval would enable the treatment of all adults and adolescents above 12 years of age in all European Union member states, as well as Iceland, Liechtenstein, and Norway.
On September 15, BMY announced adjuvant treatment with Opdivo (nivolumab) demonstrated a statistically significant and clinically meaningful improvement in recurrence-free survival (rfs) in patients with Stage IIB/C Melanoma in the CheckMate -76K Trial.
On September 14, BMY declared a quarterly dividend of $0.54 per share, which would be paid out on November 1. The company pays a $2.16 per share dividend annually, which translates to a 3.03% yield on the current price. The current dividend payout ratio is 27.33%. The company’s dividend payouts have grown at a CAGR of 6.4% over the past five years.
For the second quarter of fiscal 2022 ended June 30, BMY’s revenue increased 1.6% year-over-year to $11.89 billion. During the same period, net earnings attributable to BMS increased 34.7% year-over-year to $1.42 million, while its EPS increased 18.4% year-over-year to $1.93.
Analysts expect BMY’s revenue for the fiscal year 2023 (ending December 2023) to increase 3.4% year-over-year to $47.70 billion. The company’s EPS for the next year is expected to grow 6.7% from the previous year to $8.02. Moreover, BMY has an impressive earnings surprise history, as it has topped the consensus EPS estimates in each of the trailing four quarters.
BMY’s stock has gained 3.8% over the past month and 14.2% year-to-date.
BMY’s POWR Ratings reflect this promising outlook. The company’s overall A rating translates to Strong Buy in our proprietary rating system.
The stock also has an A grade for Value and a grade B for Growth, Sentiment, and Quality. It is ranked #3 of 165 stocks in the Medical – Pharmaceuticals industry.
To see additional POWR Ratings for Stability, and Momentum for BMY, click here.
CVS Health Corporation (CVS)
CVS operates as a health solutions company. The company operates through four segments: Health Care Benefits; Pharmacy Services; Retail/LTC; and Corporate/Other. Its offerings include health & wellness services, health plans, pharmacy services, and prescription drug coverage.
On September 21, CVS declared its quarterly dividend of $0.55, payable on November 1, 2022. The company pays $2.20 annually, which translates to a 2.19% yield at its current price. The current dividend payout ratio is 24.5%. Its dividends have grown at a 2.2% CAGR over the past five years.
On September 5, CVS announced its entry into a definitive agreement to acquire Signify Health (SGFY) for approximately $8 billion. According to CVS President and CEO Karen S. Lynch, “Signify Health will play a critical role in advancing our health care services strategy and gives us a platform to accelerate our growth in value-based care.”
For the fiscal 2022 second quarter ended June 30, 2022, CVS’ total revenue increased 11% year-over-year to $80.64 billion. The company’s operating income grew 5.6% from the prior-year quarter to $4.57 billion, while its net income increased 6.1% year-over-year to $2.96 billion.
Analysts expect CVS’ EPS and revenue for the fiscal 2022 third quarter ending September 30, 2022, to increase 1.5% and 4.4% year-over-year to $2 and $76.78 billion, respectively. It has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 12.4% over the past year.
CVS’ POWR Ratings reflect solid prospects. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system. It has a B grade for Sentiment, Stability, and Growth.
It is ranked #1 of four stocks in the B-rated Medical – Drug Stores industry.
Click here to access additional ratings for Value, Momentum, and Quality for CVS.
BMY shares were trading at $70.92 per share on Wednesday morning, down $0.29 (-0.41%). Year-to-date, BMY has gained 16.39%, versus a -20.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant.
With a master’s degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.