The stock market has been witnessing wild swings lately due to concerns over multi-decade high inflation and the Federal Reserve’s tightening monetary policy. This month, the Fed increased its benchmark interest rate by 75 basis points to tame the inflationary pressure. Moreover, additional interest rate hikes are expected in the coming months.
According to economists polled by Reuters, the Fed is expected to lift interest rates by 75 basis points next month, followed by 50 basis points in September. The Fed’s clamp down on inflation is raising the odds of recession, further leading to heightened volatility in the market. The CBOE Volatility Index has gained 57.8% year-to-date.
Amid the volatile environment, dividend-paying stocks with solid growth records could help investors ensure a stable income stream. Dividend increases reflect the company’s strong financials, healthy cash flows, and ability to pay back shareholders. The investors’ interest in the dividend stocks is evident from iShares Core High Dividend ETF’s (HDV) 5.8% gains over the past year.
Thus, we believe investing in quality dividend-paying stocks Cardinal Health, Inc. (CAH), Investar Holding Corporation (ISTR), and National HealthCare Corporation (NHC), which have increased their dividends recently, could be ideal buys to navigate the volatile swings. These stocks are rated Buy in our proprietary POWR Ratings system.
Cardinal Health, Inc. (CAH)
CAH provides various healthcare services and products in the United States, Canada, Europe, and Asia. The company operates through two segments: Pharmaceutical; and Medical. It offers customized solutions for hospitals, healthcare systems, pharmacies, clinical laboratories, and at-home patients.
On June 2, CAH introduced a new distribution center in Columbus, Ohio, as part of a multi-year warehouse modernization and growth plan. The new distribution center is expected to support the company’s at-home solutions business.
“Expanding our warehouse footprint optimizes our distribution network and enhances our customer service levels while positioning us for sustained growth in an area of patient care that continues to evolve,” said Rob Schlissberg, President of Cardinal Health at-Home Solutions.
On May 11, CAH’s Board of Directors raised its quarterly dividend to $0.50 per share, payable on July 15, 2022. Its dividend payouts have grown at a 1% CAGR over the last three years and 1.8% CAGR over the past five years. Its four-year average dividend yield is 3.74%, while its current dividend translates to a 3.61% yield annually.
In the fiscal 2022 third quarter ended March 31, 2022, CAH's revenue increased 14.2% year-over-year to $44.84 billion. The company’s cash and equivalents and current assets came in at $2.36 billion and $30.88 billion, respectively, as of March 31, 2022.
The $44.83 billion consensus revenue estimate for the fiscal 2022 fourth quarter (ending June 2022) represents a 5.3% improvement from the same period in 2022. Analysts expect CAH’s EPS for the current quarter to increase 54.5% year-over-year to $1.19. The company has topped the consensus revenue estimates in each of the trailing four quarters.
CAH’s shares have increased 6.5% year-to-date to close the last trading session at $54.86.
CAH's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CAH has a grade of A for Growth and B for Value. Within the Medical - Services industry, it is ranked #10 of 84 stocks. To see additional POWR Ratings (Sentiment, Momentum, Stability, and Quality) for CAH, click here.
Investar Holding Corporation (ISTR)
ISTR operates as the bank holding company for Investar Bank and provides commercial banking products to individuals and small to medium-sized businesses in South Louisiana. Also, the company offers various deposit products and services, commercial real estate loans, industrial loans, consumer loans, and other cash management products.
On June 15, ISTR declared a quarterly cash dividend of $0.09 per share to holders of ISTR common stock, payable on July 29. This represents an increase of 6% in the dividend per share compared to the prior quarter and marks the 35th quarterly dividend paid by the company.
ISTR pays a $0.36 per share dividend annually, translating to a 1.65% yield. The stock’s dividend payouts have grown at a 20.1% CAGR over the last three years and 43.7% CAGR over the past five years. Furthermore, its four-year average dividend yield is 1.21%.
ISTR's net interest income increased 11.1% year-over-year to $21.82 million in the fiscal first quarter ended March 31, 2022. Its income before income taxes rose 87.1% year-over-year to $12.70 million. In addition, the company’s net income and earnings per common share came in at $10.10 million and $0.68, registering increases of 88.5% and 90.2%, respectively, from the prior-year period.
Analysts expect ISTR’s EPS to grow 393.3% year-over-year to $2.57 for its fiscal year 2022 (ending December 2022). The $97.37 billion consensus revenue estimate for the ongoing year represents a 5.9% rise from the previous year. The company has surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 20.1% over the past six months and 18.8% year-to-date to close the last trading session at $21.87.
ISTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, equating to a Buy in our proprietary rating system.
ISTR has a grade of A for Stability and Sentiment. It has a B grade for Growth, Value, and Momentum. Within the Southwest Regional Banks industry, it is ranked #1 of 28 stocks. To see additional POWR Ratings (Quality) for ISTR, click here.
National HealthCare Corporation (NHC)
NHC operates, manages, and provides services to skilled nursing facilities, independent living facilities, assisted living facilities, home care agencies, and behavioral health hospitals. The company operates over 75 skilled nursing facilities with 9,473 beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, and 34 homecare agencies.
On May 5, NHC’s Board of Directors declared a quarterly dividend of 57 cents ($0.57) per common share, payable to shareholders on August 1. This represents a 3.6% increase compared to last quarter’s regular common dividend. The stock pays $2.28 as dividends annually, yielding 3.20% on the current price.
Over the last five years, NHC's dividend payout has grown at a 3.5% CAGR. Its four-year average dividend yield is 2.84%.
On February 18, NHC announced an expansion of its behavioral health service line. This year, NHC will open two new behavioral health hospitals in Knoxville, Tennessee, and Maryland Heights, Missouri. This expansion might accelerate the company's growth and boost its revenue streams.
In the fiscal 2022 first quarter ended March 31, 2022, NHC's net operating revenues and grant income increased 11.2% year-over-year to $278.98 million. The company's cash, cash equivalents, and marketable securities amounted to $206.03 million, while its current assets came in at $384.02 million as of March 31, 2022.
The stock has gained 4.9% year-to-date and closed the last trading session at $71.29.
NHC's POWR Ratings reflect a strong outlook. The stock's overall B rating translates to a Buy in our POWR Ratings system.
NHC has a grade of A for Stability and B for Sentiment. It is ranked #20 of 84 stocks in the Medical - Services industry. Click here to see NHC's POWR Ratings for Momentum, Growth, Value, and Quality.
CAH shares were trading at $54.97 per share on Tuesday morning, up $0.11 (+0.20%). Year-to-date, CAH has gained 7.68%, versus a -17.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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