Despite the favorable inflation data for October uplifting investors' optimism, market volatility is expected to remain. According to Capital Economics, the S&P 500 might drop to 3,200 by the middle of 2023.
Moreover, Sebastien Page, chief investment officer and head of T. Rowe Price Group’s global multi-asset division, said that there is “an abundance of doom and gloom in global economies and financial markets, leading many investors to remain prudently defensive moving into 2023.”
Under such circumstances, dividend stocks are gaining popularity because they tend to offer investors consistent long-term returns despite economic uncertainty. Investors’ interest in dividend stocks is evident from the SPDR S&P Dividend ETF (SDY) 9.9% returns over the past month.
As the high inflation and the Fed’s rate hikes are raising recession odds, we think quality dividend-paying stocks, Gilead Sciences, Inc. (GILD) and Flowers Foods, Inc. (FLO), are ideal additions to your portfolio now.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally for over three decades.
On November 2, 2022, GILD announced that the U.S. Food and Drug Administration (FDA) approved its supplemental new drug application for Vemlidy® (tenofovir alafenamide) for treating chronic hepatitis B virus (HBV) infection and compensated liver disease.
This approval represents a significant step forward in GILD’s research and portfolio diversification.
On October 20, 2022, Kite, a GILD business, and Refuge Biotechnologies, Inc. struck a worldwide exclusive licensing deal to develop possible blood cancer medicines.
GILD has paid dividends for six consecutive years. Over the last three years, GILD’s dividend payouts have grown at a 5.6% CAGR. While GILD’s four-year average dividend yield is 4%, its current dividend translates to a 3.52% yield.
GILD’s trodelvy’s sales came in at $180 million for the third quarter that ended September 30, up 78.2% year-over-year. The company’s current liabilities came in at $10.42 billion for the period ended September 30, 2022, compared to $11.61 billion for the period ended December 31, 2021.
Also, its total liabilities and equity came in at $62.56 billion, compared to $67.95 billion for the same period.
Street expects GILD’s revenue to come in at $6.65 billion for the quarter ending December 2022. Its EPS is expected to increase 115.3% year-over-year to $1.49 for the same period. It surpassed EPS estimates in three of the four trailing quarters. Over the past nine months, the stock has gained 36.4% to close the last trading session at $83.62.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GILD has an A grade for Value and Sentiment and a B for Quality. In the Biotech industry, it is ranked #3 out of 381 stocks. Click here for the additional POWR Ratings for Stability, Growth, and Momentum for GILD.
Flowers Foods, Inc. (FLO)
FLO produces and markets packaged bakery products in the United States. It offers fresh bread, buns, rolls, snack cakes, tortillas, frozen bread, and rolls under the Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley’s, and Tastykake brand names.
On November 10, 2022, Ryals McMullian, FLO’s President and CEO, said, “Flowers’ record results in a challenging environment underscore the resiliency of our business and the ongoing effectiveness of our strategy.”
FLO has paid dividends for 18 consecutive years. Over the last three years, FLO’s dividend payouts have grown at a 5.1% CAGR. While FLO’s four-year average dividend yield is 3.33%, its current dividend translates to a 3.09% yield.
FLO’s sales came in at $1.16 billion for the third quarter that ended October 8, 2022, up 12.7% year-over-year. Its net income came in at $40.53 million, up 4.3% year-over-year. Moreover, its EPS came in at $0.19, up 5.6% year-over-year.
FLO’s revenue is expected to increase 11.2% year-over-year to $4.82 billion in 2022. Its EPS is expected to increase by 3.2% year-over-year to $1.28 in 2022. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 5.6% to close the last trading session at $28.37.
FLO’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has a B grade for Growth and Quality. The stock is ranked #7 out of 83 in the B-rated Food Makers industry.
We’ve also rated FLO for Stability, Momentum, Sentiment, and Value. Get all FLO ratings here.
GILD shares were trading at $83.40 per share on Friday afternoon, down $0.22 (-0.26%). Year-to-date, GILD has gained 19.11%, versus a -15.98% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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