Amid high prices, consecutive rate hikes, and rising recession odds, market volatility has heightened this year. The CBOE Volatility Index is up 40.5% year-to-date.
Aneta Markowska, a chief financial economist at Jefferies Financial Group Inc., expects an economic downturn to commence by the third quarter of 2023. She said, “It could start out feeling like a mild recession, but then intensify as we move through time.”
Given the current backdrop, dividend stocks have been gaining traction as they can provide investors with steady long-term returns despite economic uncertainty. Investors’ interest in dividend stocks is evident from the SPDR S&P Global Dividend ETF’s (WDIV) 6.7% gains over the past month.
Moreover, according to Morgan Stanley’s Nick Lentini, “The investing backdrop of the past year, driven by macro-economic conditions and combined with the rising risk of recession, have fueled outperformance for many dividend-paying stocks.”
Therefore, quality dividend stocks CVS Health Corporation (CVS) and Spok Holdings, Inc. (SPOK) could be ideal investments to see your portfolio through tough times and beyond.
CVS Health Corporation (CVS)
CVS provides health services in the United States. Its segments are Health Care Benefits; Pharmacy Services; and Retail/LTC.
On November 2, 2022, Karen S. Lynch, CVS’ President, and CEO, said, “We continue to execute on our strategy with a focus on expanding capabilities in health care delivery, and the announced acquisition of Signify Health will further strengthen our engagement with consumers.”
CVS has paid dividends for 14 consecutive years. Over the last three years, CVS’ dividend payouts have grown at a 3.2% CAGR. While CVS’ four-year average dividend yield is 2.79%, its current dividend translates to a 2.25% yield.
For its third quarter that ended September 30, 2022, CVS’ total revenues came in at $81.16 billion, up 10% year-over-year. Its adjusted operating income came in at $4.23 billion, up 3.9% year-over-year. Also, its adjusted EPS came in at $2.09, up 6.1% year-over-year.
Analysts expect CVS’ revenue to increase 7.8% year-over-year to $314.84 billion in 2022. Its EPS is expected to increase by 5.6% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 7.6% to close the last trading session at $96.10.
CVS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CVS has an A grade for Growth and a B for Stability and Sentiment. Within the B-rated Medical – Drug Stores industry, it is ranked first among four stocks. Click here for the additional POWR Rating for Value, Momentum, and Quality for CVS.
Spok Holdings, Inc. (SPOK)
SPOK provides healthcare communication solutions in the United States, Europe, Canada, Australia, Asia, and the Middle East. It delivers clinical information to care teams.
On October 26, 2022, Vincent D. Kelly, SPOK’s CEO, said, “Going forward, we believe our extensive experience operating our established communication solutions will create significant value for stockholders by maximizing revenue and cash flow generation.”
SPOK has paid dividends for 13 consecutive years. Over the last three years, SPOK’s dividend payouts have grown at a 35.7% CAGR. While SPOK’s four-year average dividend yield is 5.90%, its current dividend translates to a 15.24% yield.
SPOK’s total revenue came in at $33.74 million for the third quarter that ended September 30, 2022, down 5.9% year-over-year. However, its operating income came in at $3.54 million, compared to a loss of $3.56 million in the year-ago period. Moreover, its net income came in at $2.92 million, compared to a loss of $2.49 million in the previous period.
Street expects SPOK’s revenue and EPS to come in at $32.50 million and $0.07, respectively, for the quarter ending December 2022. Over the past six months, the stock has gained 14.7% to close the last trading session at $8.20.
SPOK’s overall A rating equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B for Sentiment and Quality.
Within the Telecom – Domestic industry, it is ranked first among 20 stocks. Click here for the additional POWR Ratings for Value, Momentum, and Stability for SPOK.
CVS shares were trading at $95.47 per share on Thursday morning, down $0.63 (-0.66%). Year-to-date, CVS has declined -5.37%, versus a -16.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
2 Dividend Stocks That Can See Your Portfolio Through Tough Times and Beyond StockNews.com
