3 Dividend Stocks to Buy to Help Soothe Some of Your Pain Although inflation eased slightly last month, the Fed has indicated that the final level of interest rates could be higher than expected. With further interest rate hikes and the possibility...
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Although inflation eased slightly last month, the Fed has indicated that the final level of interest rates could be higher than expected. With further interest rate hikes and the possibility of a recession expected to keep the market under pressure, it could be wise to buy dividend-paying stocks Pfizer (PFE), LSI Industries (LYTS), and Spok Holdings (SPOK) to generate a steady income stream. Read more….
The Federal Reserve recently raised its short-term borrowing rate by 75 basis points to a target range of 3.75%-4%, the highest since January 2008. High borrowing costs and inflation continue to worry investors about a possible recession.
While dealing with many economic headwinds and market volatility, investors might make emotionally charged investment decisions that may be irrational. In a deteriorating macroeconomic climate, dividends can help generate a stable income and provide a buffer against inflation.
Investors' interest in dividend stocks is evident from the SPDR S&P Dividend ETF (SDY) 12.8% returns over the past month.
Therefore, it could be wise to invest in fundamentally strong stocks Pfizer Inc. (PFE), LSI Industries Inc. (LYTS), and Spok Holdings, Inc. (SPOK), which have an impressive track record of dividend payments.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic and women's health, biosimilars, sterile injectable and anti-infective medicines, and oral COVID-19 treatment.
Over the last three years, PFE's dividend payouts have grown at a 5.5% CAGR. Its four-year average dividend yield is 3.6%, and its forward annual dividend of $1.60 per share translates to a 3.36% yield. The company grew its dividend payments for 12 consecutive years.
On October 03, 2022, PFE announced its acquisition of Biohaven Pharmaceutical Holding Company Ltd., the maker of NURTEC® ODT (rimegepant), an innovative migraine therapy. The acquisition is believed to strengthen Pfizer's innovative Internal Medicine pipeline through 2030, bringing new treatment options to patients suffering from migraines.
For the fiscal third quarter ended October 2, 2022, PFE's total assets increased 7.6% to $195.35 billion, compared to $181.48 billion for the fiscal year ended December 31, 2021. The company's adjusted net income increased 39.7% year-over-year to $10.17 billion. Its non-GAAP EPS came in at $1.78, representing a 40.2% increase from the prior-year quarter.
PFE's EPS and revenue for the quarter ending December 31, 2022, are expected to increase 1% and 1.9% year-over-year to $1.09 and $24.29 billion, respectively. It has an impressive earnings surprise history, surpassing its consensus EPS estimates in each of the trailing four quarters. The stock has gained 13.6% over the past month to close the last trading session at $47.60.
PFE's POWR Ratings reflect its solid growth prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Medical - Pharmaceuticals industry, it is ranked #3 out of 162 stocks. The company has an A grade for Value and a B for Growth and Quality. Click here to see the additional POWR Ratings of PFE for Momentum, Stability, and Sentiment.
LSI Industries Inc. (LYTS)
LYTS produces and sells non-residential lighting and retail display solutions in the United States, Canada, Mexico, Australia, and Latin America. It operates in two segments, Lighting and Display Solutions.
LYTS' four-year average dividend yield is 3.5%, and its forward annual dividend of $0.20 per share translates to a 1.99% yield. The company paid dividends for 17 consecutive years.
LYTS' net sales for the first quarter ended September 30, 2022, increased 19% year-over-year to $127.07 million. Its adjusted operating income increased 117.7% from the prior-year quarter to $10.89 million.
The company's adjusted net income increased 99.9% year-over-year to $7.08 million. Its adjusted EBITDA increased 76% year-over-year to $13.31 million, while its non-GAAP EPS came in at $0.25, representing a 92.3% increase from the prior-year quarter.
Analysts expect LYTS' EPS and revenue for the quarter ending December 31, 2022, to increase 54.6% and 6.6% year-over-year to $0.17 and $118.44 million, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 46.5% year-to-date to close the last trading session at $10.05.
LYTS' positive outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked first out of 89 stocks in the Industrial - Equipment industry. It has an A grade for Value and Sentiment and a B for Growth and Quality.
We have also given LYTS grades for Momentum and Stability. Get all LYTS ratings here.
Spok Holdings, Inc. (SPOK)
SPOK provides healthcare communication solutions worldwide. It delivers clinical information to care teams to enhance patient outcomes. The company offers subscriptions to one-way or two-way messaging services and ancillary services and sells devices to resellers. In addition, the company provides professional software license updates and product support services, as well as sells third-party equipment.
Over the last three years, SPOK's dividend payouts grew at a 28.6% CAGR. Its four-year average dividend yield is 5.9%, and its forward annual dividend of $1.25 per share translates to a 14.38% yield. The company paid dividends for 12 consecutive years.
On April 25, 2022, SPOK announced that through its strong partnership with Tyto Athene, it would provide maintenance, support, and professional services for its communications solutions at 48 United States Air Force, Air National Guard, Air Force Reserve, and Space Force bases globally.
Vincent D. Kelly, president and CEO of Spok Holdings, Inc., said, "As we enter our eighth year of providing these life safety systems at bases across the globe, we consider it a privilege to continue our support for such a crucial division in our country's defense system."
SPOK's net income for the third quarter ended September 30, 2022, increased 217.1% year-over-year to $2.92 million. The company's adjusted operating expenses declined 29.2% year-over-year to $27.87 million. Its adjusted EBITDA increased 286.6% year-over-year to $4.66 million. In addition, its net EPS increased 215.4% from the year-ago period to $0.15.
For the quarter ending June 30, 2023, SPOK's EPS is expected to increase 40% year-over-year to $0.14. Over the past six months, the stock has gained 21.9% to close the last trading session at $8.69.
SPOK's strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It is ranked first out of 20 stocks in the Telecom - Domestic industry. In addition, it has an A grade for Growth and a B for Sentiment and Quality.
Click here to see the other ratings of SPOK for Value, Momentum, and Stability.
PFE shares fell $0.10 (-0.21%) in premarket trading Monday. Year-to-date, PFE has declined -16.77%, versus a -15.12% 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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