Consumer prices are soaring at a pace not seen in decades, raising the possibility of the Fed maintaining its hawkish monetary policy stance. The Fed will likely raise interest rates by 0.75 percentage points later this month, and there could be many more hikes in the offing.
Since these factors have increased the odds of the economy slipping into a recession, deteriorating sentiments have kept the market extremely volatile. Adding to the worries, the International Monetary Fund has cut the U.S. growth projections to 2.3% from 2.9%.
However, CNBC’s Jim Cramer recently said that the market could witness a significant rally in August, considering an analysis from legendary market technician Larry Williams. “The last time we spoke to him about the broader averages in late May, he predicted that after some choppy trading, the market would have a strong rally through late August. Right now, what he’s seeing in the futures confirms that thesis,” he said.
Given the highly volatile market conditions, it could be wise to buy otherwise boring stocks UnitedHealth Group Incorporated (UNH) and Bassett Furniture Industries, Incorporated (BSET), and REIT Alliance Global Group, Inc. (ALGGY), as their dividends could provide some cushion to your portfolio.
UnitedHealth Group Incorporated (UNH)
UNH operates as a diversified healthcare company in the United States through four segments, UnitedHealthcare; Optum Health; OptumInsight; and OptumRx.
UNH’s forward annual dividend of $6.60 translates to a 1.27% yield. The company has increased its dividends at a CAGR of 18% over the past five years.
On July 15, UNH announced the elimination of out-of-pocket costs for certain insulins and drugs used to treat emergency cases. This new standard offering aims to make prescription drugs more accessible and affordable to patients.
On May 12, the state of Missouri selected the UNH Community Plan of Missouri as a managed care organization to administer its MO HealthNet Managed Care Program for Medicaid members in Temporary Assistance for Needy Families (TANF) and the Children’s Health Insurance Program (CHIP). This marks its strong position in the healthcare space.
For the fiscal second quarter ended June 30, UNH’s total revenues increased 12.6% year-over-year to $80.33 billion. Its earnings from operations grew 19.3% from the year-ago value to $7.13 billion, while its net earnings stood at $5.20 billion, reflecting an 18.9% increase year-over-year. The company’s EPS came in at $5.34, reflecting an increase of 19.7% year-over-year.
The consensus EPS estimate of $5.47 for the fiscal quarter ending September 2022 represents a 21.1% improvement year-over-year. The consensus revenue estimate of $80.38 billion for the same quarter represents an 11.1% increase from the same period last year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 23.8% to close the last trading session at $519.37. It gained 14.9% in the past month.
UNH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
UNH has a B grade in Growth, Quality, Sentiment, and Stability. It is ranked #2 of 11 stocks in the A-rated Medical - Health Insurance industry.
Beyond what is stated above, we’ve also rated UNH for Momentum and Value. Get all the UNH ratings here.
Bassett Furniture Industries, Incorporated (BSET)
BSET engages in manufacturing, marketing, and retail home furnishings in the United States and internationally. It operates through three segments – Wholesale; Retail company-owned Stores; and Logistical Services.
On July 14, BSET announced an increase in quarterly dividend by 14% to $0.16 per share, payable on August 26, 2022. This demonstrates the company’s strong cash positioning. The company’s forward annual dividend of $0.56 translates into a 2.74% yield. BSET’s dividends have grown at a 7% CAGR over the past five years.
For the fiscal second quarter ended May 28, 2022, BSET’s gross profit increased 15.5% year-over-year to $65.94 million. Its income from operations grew 55.4% from the year-ago value to $11.01 million. Net income for the quarter stood at $47.12 million, reflecting a 688.7% increase year-over-year. Moreover, its EPS was $4.94, up 723.3% from the prior-year quarter.
Street expects BSET’s EPS for the quarter ending August 2022 to improve 106.5% year-over-year to $0.64. The consensus revenue estimate of $119.93 million for the same period represents a 0.9% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 50.2% year-to-date and 46.2% over the past month to close the last trading session at $23.34.
BSET’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our proprietary rating system.
The company also has an A grade in Quality and Sentiment and a B in Growth. It is ranked #2 out of the 63 stocks in the Home Improvement & Goods industry. Click here to get BSET’s Momentum, Stability, and Value ratings.
Alliance Global Group, Inc. (ALGGY)
ALGGY engages in real estate development, tourism, entertainment and gaming, food and beverage, quick-service restaurants, and infrastructure development businesses. It operates through Megaworld; Emperador; Travellers; and GADC segments. It is based in Quezon City, the Philippines.
ALGGY pays an annual dividend of $0.07. It has a 4-year average dividend yield of 0.39%. Besides the dividends, being a REIT, ALGGY should survive the market volatility well. REITs typically perform well amid an inflationary environment as the values of their properties increase.
ALGGY’s consolidated revenues increased 18% year-over-year to P37.50 billion ($0.67 billion) in the fiscal first quarter of 2022. Net income increased by 52% from the prior-year quarter to P3.90 billion ($0.07 billion). Net profit increased 67% from the same period the prior year to P5.40 billion ($0.10 billion).
Analysts expect ALGGY’s revenue to come in at $3.67 billion, indicating an increase of 44.1% year-over-year for the fiscal year ending December 2023.
The stock has gained 2.4% intraday to close the last trading session at $8.81.
The company has an overall rating of A, translating to Strong Buy in our proprietary rating system. ALGGY is rated B in Quality, Stability, and Value. Within the REITs - Diversified industry, it is ranked #1 of 51 stocks.
Click here for additional POWR Ratings for Momentum, Sentiment, and Growth for ALGGY.
UNH shares were trading at $529.86 per share on Tuesday afternoon, up $10.49 (+2.02%). Year-to-date, UNH has gained 6.21%, versus a -16.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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