4 Dividend Aristocrats to Buy in February
Rising inflation and the Fed’s signal that it will raise interest rates multiple times this year fostered high market volatility last month. And although the major market indexes rose for...
Rising inflation and the Fed's signal that it will raise interest rates multiple times this year fostered high market volatility last month. And although the major market indexes rose for the third consecutive trading session yesterday, many analysts expect the market to remain volatile this year. Given this backdrop, we think investors could sidestep market volatility to a degree by adding dividend aristocrats Johnson & Johnson (JNJ), The Coca-Cola Company (KO), Colgate-Palmolive (CL), and Emerson Electric (EMR) to their portfolios in February. Let's discuss.
The major market indexes rose for the third straight trading session yesterday. The Dow Jones Industrial Average (DJIA) climbed 273.38 points to close at 35,405.24, while the S&P 500 and the Nasdaq Composite closed at 4,546.54 and 14,346, rising 30.99 points and 106.12 points, respectively.
The market experienced wild price swings in January owing to the Fed's signal that it will increase interest rates multiple times this year to control inflation, which has climbed to its highest level in nearly four decades. The DJIA slipped 3.3% in January, while the S&P 500 and Nasdaq fell 5.3% and 8.9%, respectively, marking their worst monthly performance since March 2020. According to BofA Securities' U.S. head of equity and quantitative research, Savita Subramanian, "It's going to be a year where we are shocked by the volatility." Her price target for the S&P 500 is 4,600. "Between today and year-end, we're going to hit that target multiple times, and we're going to see some big swings from the market," she predicted.
Given this backdrop, we think it could be wise to bet on quality dividend-yielding stocks to hedge one's portfolio by ensuring a steady income stream. Therefore, dividend aristocrats Johnson & Johnson (JNJ), The Coca-Cola Company (KO), Colgate-Palmolive Company (CL), and Emerson Electric Co. (EMR) could be solid additions to one's portfolio now.
Johnson & Johnson (JNJ)
JNJ in New Brunswick, N.J., researches, develops, manufactures, and sells a range of products in the healthcare field. It operates through the Consumer, Pharmaceutical, and Medical Devices segments.
On Feb. 1, 2022, JNJ's Janssen Pharmaceutical Companies announced that the FDA had approved an expanded label for CABENUVA to be administered every two months for the treatment of HIV-1 in virologically suppressed adults on a stable regimen, with no history of treatment failure, and with no known or suspected resistance to either rilpivirine or cabotegravir. Candice Long, President, Infectious Diseases & Vaccines, Janssen Therapeutics, said, "With this milestone, adults living with HIV have a treatment option that further reduces the frequency of medication."
Over the last three years, JNJ's dividend payout has grown at a 5.8% CAGR. Its four-year average dividend yield is 2.62%, and its current dividend translates to a 2.46% yield. The company began paying dividends in 1989. It is expected to pay a $1.06 per share quarterly dividend on March 8, 2022.
JNJ's sales increased 10.4% year-over-year to $24.80 billion for the fourth quarter, ended Dec. 31, 2021. The company's adjusted net earnings increased 14.4% year-over-year to $5.67 billion. Also, its non-GAAP EPS came in at $2.13, representing a 14.5% increase year-over-year.
Analysts expect JNJ's EPS for its fiscal 2022 to increase 7.3% year-over-year to $10.52. Its revenue for the quarter ending March 31, 2022, is expected to increase 8.3% year-over-year to $23.81 billion. And it surpassed the Street's EPS estimates in each of the trailing four quarters. The stock has gained 5% in price over the past year to close its last trading session at $170.88.
JNJ's POWR Ratings reflect its solid prospects. According to our proprietary rating system, it has an overall rating of A, which translates to a Strong Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Stability and a B grade for Value and Quality. In the Medical – Pharmaceuticals industry, it is ranked #2 of 181 stocks. Click here to see the other ratings of JNJ for Growth, Momentum, and Sentiment.
The Coca-Cola Company (KO)
Famous beverage company KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The Atlanta, Ga.-based concern provides sparkling soft drinks, water, enhanced water, juice, dairy, and syrups. In addition, it sells products under Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, and Fanta brands.
On Nov. 1, 2021, KO announced that it would complete the acquisition of the remaining stake in BodyArmor for $5.60 billion. This deal will likely help the company expand its reach.
KO began paying dividends in 1989. Over the last three years, its dividend payout has grown at a 2.50% CAGR. While its four-year average dividend yield is 3.20%, the current dividend translates to a 2.75% yield.
KO's net operating revenues increased 16% year-over-year to $10.04 billion for its fiscal third quarter, ended Oct. 1, 2021. The company's net income increased 42% year-over-year to $2.47 billion. Also, its EPS came in at $0.57, representing a 41% increase year-over-year.
Analysts expect KO's EPS and revenue for fiscal 2021 to increase 17.4% and 15.5%, respectively, year-over-year to $2.29 and $38.12 billion. It surpassed the Street's EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 25% in price to close the last trading session at $60.56.
KO's strong fundamentals are reflected in its POWR Ratings. It has an A grade for Quality and a B grade for Stability and Sentiment.
Colgate-Palmolive Company (CL)
CL is a household and consumer products company. The New York City-based company operates in the Oral Personal and Home Care and Pet Nutrition segments. The company's Oral, Personal, and Home Care segment sells products that include liquid hand soap, shampoos, and deodorants through Palmolive, Protex, Ajax, Axion, and Softsoap. CL manufactures and markets pet nutrition products for dogs and cats through Hill's Pet Nutrition segment.
On Jan. 24, 2022, CL and 3Shape announced a partnership to introduce Colgate Illuminator, an exclusive, tailored-to-patient teeth whitening tool, to dental clinics across the U.S. The new tool should help deliver an improved patient experience by enabling more accurate consultations.
CL began paying dividends in 1989. Over the last three years, its dividend payout has grown at a 2.33% CAGR. While its four-year average dividend yield is 2.37%, the current dividend translates to a 2.18% yield. It is expected to pay a $0.45 per share quarterly dividend on Feb. 15, 2022.
CL's net sales increased 2% year-over-year to $4.40 billion for the fourth quarter, ended Dec.31, 2021. The company's selling, general and administrative expenses decreased 2.1% year-over-year to $1.59 billion, and its total debt for the fiscal year ended Dec. 31, 2021, fell 4.6% year-over-year to $7.24 billion.
Analysts expect CL's EPS and revenue for its fiscal 2023 to increase 8.1% and 3.8%, respectively, year-over-year to $3.59 and $18.55 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 8% in price to close the last trading session at $81.92.
CL's POWR Ratings reflect solid prospects. It has an A grade for Quality and a B grade for Stability.
Emerson Electric Co. (EMR)
EMR in Ferguson, Mo., is a global technology, software, and engineering company that provides various solutions for customers in industrial, commercial, and residential markets. The company's segments include Automation Solutions; and Climate Technologies and Tools & Home Products, which comprise its commercial and residential solutions business.
On Jan. 27, 2022, EMR launched premium monitoring services for its Oversight cargo services platform, transforming billions of aggregated sensor data points from GO loggers and trackers into insights customers can utilize to manage their cold chain effectively.
The company began paying dividends in 1989. Over the last three years, EMR's dividend payout has grown at a 1.44% CAGR. Its four-year average dividend yield is 2.74%, and its current dividend translates to a 2.24% yield.
EMR's net sales increased 9% year-over-year to $4.94 billion for the fourth quarter, ended Sept. 30, 2021. The company's adjusted EBIT increased 7.2% year-over-year to $942 million. In addition, its adjusted EPS increased 10% year-over-year to $1.21.
For its fiscal year 2022, EMR's EPS and revenue are expected to increase 19.8% and 6.7%, respectively, year-over-year to $4.91 and $19.45 billion. It surpassed the Street's EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 14.4% in price to close the last trading session at $92.48.
EMR's POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the Industrial – Equipment industry, it is ranked #18 of 94 stocks. To see the additional ratings of EMR for Growth, Value, Momentum, and Sentiment, click here.
JNJ shares were unchanged in premarket trading Wednesday. Year-to-date, JNJ has declined -0.11%, versus a -4.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master's degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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