September inflation report came in hotter than expected, increasing the chances of aggressive interest rate hikes later this year. Since analysts expect the economy to tip into a recession next year, dividend-paying stocks Walmart (WMT), Coca-Cola (KO), and Greif (GEF), which are backed by solid fundamentals, could help you plan your retirement even in a bear market. Read more….
The Federal Reserve has undertaken a series of interest rate hikes in an effort to control the surging inflation. Despite rate hikes, inflation came in hotter than expected in September, rising 0.4% sequentially and 8.2% from a year ago. The report initially rattled financial markets, with stock market futures plunging and Treasury yields increasing.
The latest GDP estimate showed that the U.S. economy contracted in the first half of this year. JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon cautioned about the possibility of a recession, as persistent and elevated inflation could cause interest rates to rise higher than 4.5%.
The S&P 500 has slid more than 20% this year, signaling a bear market. However, there might still be opportunities left for long-term investors, as bear markets usually don’t continue for long.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On October 3, WMT’s division Sam’s Club launched its expanded Photo and Customization Services, where its members are granted access to professional photographers, enhanced photo printing services, as well as made-to-order apparel and home goods, making Sam’s Club the first to do so in the warehouse space.
On September 28, WMT celebrated the grand opening of Walmart’s first of four Next Generation Fulfillment Centers in Joliet, Illinois. The new FC should improve the company’s operative capacity and might drive up its revenues.
In February, WMT declared an annual dividend of $2.24 per share to be paid in four quarterly installments of $0.56 per share. Its annual dividend yields 1.69% on prevailing prices. The company’s dividend payouts have increased at a 1.9% CAGR over the past three and five years. The company has a record of 48 years of consecutive dividend growth.
WMT’s total revenues came in at $152.86 billion for the second quarter that ended July 31, 2022, up 8.4% year-over-year. Its consolidated net income came in at $5.15 billion, up 17.9% year-over-year, while its EPS stood at $1.88, up 23.7% year-over-year.
The consensus EPS estimate of $1.48 for the fiscal fourth quarter ending April 2023 represents a 14.1% improvement year-over-year. The consensus revenue estimate of $144.64 billion for the same quarter indicates a 3.1% increase from the prior-year period. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past three months, the stock has gained 5.5% to close the last trading session at $132.28.
WMT’s POWR Ratings reflect this promising outlook. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Sentiment and a B for Growth, Stability, and Quality. It is ranked #6 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
To see the additional POWR Ratings for WMT for Value and Momentum, click here.
The Coca-Cola Company (KO)
Beverage company KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy and plant-based beverages, tea and coffee, and energy drinks.
On September 29, KO and Molson Coors Beverage Company (TAP) announced that they had entered into an exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails. The new product launch might bolster the company’s revenue stream.
On July 21, KO declared a quarterly dividend of 44 cents per common share, which was payable to shareholders on October 3. Its annual dividend of $1.76 yields 3.15% on prevailing prices. The company’s dividend payouts have increased at a 3.1% CAGR over the past three years and a 3.6% CAGR over the past five years. The company has a record of 59 years of consecutive dividend growth.
KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion in the second quarter that ended July 1. Its non-GAAP gross profit grew 7.2% from the year-ago value to $6.67 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. The company’s non-GAAP net earnings per common share increased 2.9% from its year-ago value to $0.70.
Street expects KO’s revenue to increase 8.9% year-over-year to $42.09 billion in the fiscal year 2022. Its EPS is estimated to grow 5.9% year-over-year to $2.46 in the same year. It has surpassed EPS estimates in all four trailing quarters, which is impressive.
KO’s shares have gained 2.5% over the past five days to close the last trading session at $55.87.
KO’s overall B rating equates to a Buy in our proprietary rating system. The stock has a B grade for Stability, Sentiment, and Quality. It’s ranked #17 out of 35 stocks in the A-rated Beverages industry.
Click here to get the KO ratings for Growth, Value, and Momentum.
Greif, Inc. (GEF)
GEF is a global producer of industrial packaging products and services. The company operates through three segments: Global Industrial Packaging; Paper Packaging & Services; and Land Management.
On August 30, GEF declared quarterly cash dividends of $0.50 per share on its Class A common stock and $0.75 per share on its Class B common stock, which was payable on October 1, 2022. Its annual dividend of $2.00 yields 3.37% on prevailing prices. The company’s dividend payouts have increased at a 2.2% CAGR over the past three years and a 2.3% CAGR over the past five years.
For the fiscal third quarter that ended July 31, 2022, GEF’s net sales increased 8.8% year-over-year to $1.62 billion. The company’s operating profit increased 18.8% year-over-year to $205.70 million. Also, its net income rose 23.4% year-over-year to $146.10 million, while its class A common stock EPS grew 24.9% from its prior-year quarter to $2.36.
For the fiscal year ending October 2022, GEF’s EPS and revenue are expected to increase 43.2% and 16% year-over-year to $8.02 and $6.45 billion, respectively. It has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has declined 1.4% over the past five days to close the last trading session at $59.34.
GEF’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. It also has a B grade for Value and Quality. Within the A-rated Industrial – Packaging industry, it is ranked #3 out of 22 stocks.
Beyond what we’ve stated above, we have also given GEF grades for Growth, Momentum, Stability, and Sentiment. Get all GEF ratings here.
WMT shares were trading at $130.77 per share on Friday afternoon, down $1.51 (-1.14%). Year-to-date, WMT has declined -8.54%, versus a -23.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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