3 Top Dividend Stocks to Buy for 2022 According to POWR Ratings
The benchmark indices rallied this week as Omicron fears subsided. However, analysts warned that Fed's monetary policy changes could slow down the economy. Thus, we think dividend stocks Walmart (WMT),...
The benchmark indices rallied this week as Omicron fears subsided. However, analysts warned that Fed’s monetary policy changes could slow down the economy. Thus, we think dividend stocks Walmart (WMT), Olin Corp (OLN), and KT Corp (KT) might be reasonable bets. These stocks are Strong Buy-rated in our proprietary rating system. .
The stock market rose for a second straight session on Wednesday, December 22. The S&P 500 index gained 1% to reach 4,696.56, while the Dow Jones Industrial Average rose 0.7%, to close at 35,753.89. Dow is up 1.1% for the week, while the S&P gained 1.6%, driven by investors’ optimism and subsiding Omicron fears.
On the other hand, West Virginian Senator Joe Manchin said on Sunday that he could not back his party’s decision on the $2 trillion social and environment bill after five and half months of negotiations. The supposedly fatal blow to the Democratic legislation and the central bank’s plan to address the rising inflation and tighten its monetary policies have contributed to market volatility. The central bank “may not have the scope to raise rates as much as they say they do without inverting the yield curve and slowing down the economy more than they want,” said Kathy Jones, chief fixed-income strategist at Charles Schwab.
Given this backdrop, it could be wise to invest in fundamentally sound dividend stocks, Walmart Inc. (WMT), Olin Corporation (OLN), and KT Corporation (KT), to ensure a stable stream of return. These stocks have an overall A (Strong Buy) grade in our proprietary POWR Rating system.
Walmart Inc. (WMT)
WMT is a retail industry giant that engages in retail, wholesale, and other unit businesses globally. The company operates through the three broad segments of Walmart U.S.; Walmart International; and Sam’s Club.
Recently, Chico’s FAS became the first fashion brand to join WMT’s delivery service platform, Walmart GoLocal. The service is launched in Chicago, Illinois, and Fort Myers, Florida, and is expected to expand to other markets over the next year. This should be profitable for WMT.
On December 15, WMT announced its plans to construct a new fulfillment center in Salt Lake City, enabling it to fulfill online orders placed on Walmart.com. It is expected that the company’s e-commerce fulfilling network will be enhanced with the construction.
In February, WMT declared an annual dividend of $2.20 per share, payable in quarterly installments of $0.55 per share, payable next on January 3, 2022. Its annual dividend yields 1.57% on current prices. The company’s dividend payouts have increased at a CAGR of 1.9% over the past three years and a CAGR of 2.1% over the past five years. The company has 48 years of consecutive dividend growth.
For the fiscal third quarter ended October 31, WMT’s total revenues increased 4.3% year-over-year to $140.53 billion. Operating income improved 0.2% from the same period last year to $5.79 billion. Adjusted EPS rose 8.2% from the prior-year quarter to $1.45.
The consensus EPS estimate of $6.41 for the current year (fiscal 2022) indicates a 17% year-over-year increase. Likewise, the consensus revenue estimate for the ongoing year of $572.02 billion reflects an improvement of 2.3% from the same period last year. Moreover, WMT has an impressive surprise earnings history, as it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained marginally intra-day to close yesterday’s trading session at $139.80.
WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WMT has a Growth, Value, Stability, Sentiment, and Quality grade of B. In the 39-stock Grocery/Big Box Retailers industry, it is ranked #4. The industry is rated A.
To see the additional POWR Rating for Momentum for WMT, click here.
Olin Corporation (OLN)
OLN is a chemical products manufacturer and distributor in the United States, Europe, and globally, operating through the Chlor Alkali Products and Vinyls; Epoxy; and Winchester segments. The company sells its offerings to various industrial customers and mass merchants through its sales force.
In November, OLN announced the approval of a $1.0 billion share repurchase program. Under the program, the company’s stock may be repurchased in the open market or through privately negotiated transactions. The program reflects OLN’s confidence in its cash flow generation and future earnings.
On October 28, OLN declared a quarterly dividend of $0.20, which was payable on December 10. The quarterly dividend cumulates to a $0.80 annual dividend and yields 1.43% on current prices.
OLN’s sales increased 62.8% year-over-year to $2.34 billion in the fiscal third quarter ended September 30. Net income and net income per common share came in at $390.70 million and $2.38, up substantially from their negative year-ago value. Adjusted EBITDA improved 261.6% from the same period last year to $707 million.
Street EPS estimate for the current quarter (ending December 2021) of $2.38 reflects a rise of 2,744.4% from the prior-year quarter. Likewise, Street revenue estimate of $2.35 billion for the ongoing quarter indicates a 42% year-over-year increase. In addition, OLN has topped consensus EPS estimates in three out of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 117.1% to close yesterday’s trading session at $55.84. It has gained 127.4% year-to-date.
It’s no surprise that OLN has an overall A rating, which translates to Strong Buy in our POWR Rating system.
The stock has a B grade for Growth, Value, Momentum, Sentiment, and Quality. It is ranked #11 out of the 89 stocks in the Chemicals industry. The industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see OLN’s rating for Stability here.
KT Corporation (KT)
KT is a telecom service provider based in Seongnam, South Korea. The company’s offerings comprise fixed-line telephone services, broadband internet services; other data communication services, and media and content services.
On December 16, KT SAT, KT’s satellite providing subsidiary, announced that it suggested an alliance for LEO business to regional satellite operators. KT SAT is expected to occupy sufficient satellite capacity and enhance competitiveness in the business.
On December 8, a bioelectronic medical device company, NeuroSigma, Inc., announced that KT had made a $5 million equity investment in the company. About this investment, Jae-ho Song, KT’s Senior Executive Vice-President and Head of the AI/DX Convergence Business Group, said, “KT will fully support NeuroSigma with our competitive technologies in the fields of AI, Big Data, and Cloud to globally expand the capabilities of both KT’s digital health business and NeuroSigma’s neuro-electronic solutions.”
KT’s annual dividend of $0.61 yields 4.48% on current prices. The company’s dividend payouts have increased at a CAGR of 9.1% over the past three years and a CAGR of 22.5% over the past five years.
In the third quarter of fiscal 2021, KT’s operating revenue increased 3.6% year-over-year to KRW6.22 trillion ($5.22 billion). Operating income increased 30.1% from the prior-year quarter to KRW382.40 billion ($321.07 million). The company’s net income came in at KRW337.70 billion ($283.54 million), up 46.9% from the same period last year.
The consensus revenue estimate of $5.29 billion for the next quarter (ending March 2022) indicates a rise of 29.5% year-over-year.
The stock has gained 21.2% over the past year and 22.9% year-to-date to close yesterday’s trading session at $13.53.
This positive outlook is reflected in KT’s POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
KT has a Value grade of A and a Growth and Stability grade of B. In the 47-stock Telecom – Foreign industry, it is ranked #5. The industry is rated A.
Click here to see the additional POWR Ratings for KT (Momentum, Sentiment, and Quality).
WMT shares were trading at $139.59 per share on Thursday afternoon, down $0.21 (-0.15%). Year-to-date, WMT has declined -1.62%, versus a 27.68% rise in the benchmark S&P 500 index during the same period.
Walmart Inc. (WMT) is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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