The first quarter of 2024 painted a sobering picture for the U.S. economy, with growth falling short of expectations. Adding to the uncertainty, while inflation dipped slightly in April - offering a glimmer of relief to consumers - prices remain stubbornly high overall, keeping interest rate cuts off the table for now.
Against this uneasy backdrop for investors, three dividend stocks, Walmart Inc. (WMT), QUALCOMM Incorporated (QCOM), and Martin Marietta Materials, Inc. (MLM), have recently exceeded earnings forecasts and raised their guidance.
These companies demonstrate a strong commitment to returning capital to shareholders and show promising growth prospects, which should appeal to dividend investors seeking stability and income growth.
Dividend Stock #1: Walmart
Founded in 1945, Arkansas-based Walmart Inc. (WMT) has grown into a global retail powerhouse, commanding a massive market cap of about $524.2 billion. From its humble beginnings, Walmart has rapidly expanded, opening thousands of locations across the U.S. and internationally. Embracing innovation, Walmart offers a seamless shopping experience, allowing customers to shop anytime, anywhere, online or in-store. Currently, Walmart operates over 10,500 stores and numerous e-commerce websites in 19 countries.
Shares of this retail giant have soared 33.5% over the past 52 weeks, overshadowing the broader S&P 500 Index’s ($SPX) return of about 25.5% over the same time frame.
On Feb. 20, Walmart announced a 9% annual dividend increase, its largest in a decade. This bold move underscores the company's unwavering confidence in its future growth trajectory and robust cash flow.
With an impressive track record of 51 consecutive years of dividend growth, Walmart continues to demonstrate its commitment to rewarding shareholders. On May 28, the company paid shareholders a quarterly dividend of $0.2075 per share. Its annualized dividend of $0.83 translates to a 1.27% dividend yield.
In terms of valuation, the stock is trading at 27 times forward earnings, which is in line with its historical averages However, priced at 0.81 times sales, the stock trades much lower than the consumer staples industry median.
On May 16, shares of Walmart jumped 7% after the company reported its fiscal 2025 Q1 earnings results, which exceeded Wall Street’s projections. Total revenue soared 6.1% year over year to $161.5 billion, narrowly surpassing estimates. Adjusted EPS rose 22.5% annually to $0.60, sailing past projections by 15.4%.
Commenting on the company’s solid Q1 performance, President and CEO Doug McMillon said, “The momentum we see across the business is driven by growth in units sold and transaction counts, as well as market share gains, including general merchandise. These are not inflation-driven results.”
Encouraged by the company’s strong start to fiscal 2025, management raised its full-year guidance, anticipating consolidated net sales growth at the higher end or above the previous 3% to 4% range and adjusted EPS to hit or exceed the prior guidance of $2.23 to $2.37.
Analysts tracking Walmart project the company’s profit to increase 9% year over year to $2.42 per share in fiscal 2025 and grow another 8.3% to $2.62 per share in fiscal 2026.
Walmart stock has a consensus “Strong Buy” rating overall. Out of the 30 analysts covering the stock, 21 suggest a “Strong Buy,” four advise a “Moderate Buy,” and the remaining five give a “Hold” rating.
The average analyst price target of $69.44 indicates a potential upside of just 6.7% from the current price levels. However, the Street-high price target of $75 suggests that the stock could rally as much as 15.2%.
Dividend Stock #2: QUALCOMM
With a market cap of $237.8 billion, San Diego-based QUALCOMM Incorporated (QCOM) develops and commercializes foundational technologies for the wireless industry worldwide. Renowned for its Snapdragon processor, the chip giant offers on-device 5G and artificial intelligence (AI) innovations, and generates revenue from licensing its portfolio of IP, as well.
Shares of QUALCOMM have rallied 90.5% over the past 52 weeks, easily dwarfing the broader SPX’s gains during the same period.
On April 17, the company declared a quarterly dividend of $0.85 per share, payable to its shareholders on June 20. Plus, the company holds a remarkable track record of 20 years of consecutive dividend growth. Its annualized dividend of $3.40 per share translates to a 1.63% dividend yield.
Priced at 26.87 times forward earnings, the stock trades much lower than its wireless semiconductor industry peers like Broadcom (AVGO) and Texas Instruments (TXN).
After announcing better-than-expected fiscal Q2 earnings results after the close on May 1, shares of QUALCOMM soared 9.7% in the subsequent trading session.
Total revenue rose 1.2% year over year to $9.4 billion, marginally beating estimates. Its non-GAAP EPS of $2.44 increased 13.5% annually, outpacing forecasts by 5.3%. During the quarter, the company returned approximately $1.6 billion to its shareholders, with $895 million distributed in dividend payments and $731 million allocated for share repurchases.
While expressing satisfaction with QUALCOMM’s Q2 performance, CEO Cristiano Amon said, “As AI expands rapidly from the cloud to devices, we are extremely well-positioned to capitalize on this growth opportunity, given our leadership position at the edge across technologies, including on-device AI..” Amon also highlighted the company's fast-growing automotive pipeline, now valued at $45 billion, and predicted $4 billion in revenues from this source in fiscal 2026.
Looking forward to Q3, management expects revenues to range between $8.8 billion and $9.6 billion and non-GAAP EPS between $2.15 and $2.35. Analysts tracking QUALCOMM project the company’s profit to increase 18.1% year over year to $7.83 per share in fiscal 2024 and grow another 12.4% to $8.80 per share in fiscal 2025.
QUALCOMM stock has a consensus “Moderate Buy” rating overall. Out of the 28 analysts covering the stock, 17 suggest a “Strong Buy,” 10 advise a “Hold,” and the remaining one gives a “Strong Sell” rating.
While the stock is trading much higher than its average price target of $177.71, the Street-high price target of $240 suggests a potential upside of about 14.3% from the current price levels.
Dividend Stock #3: Martin Marietta Materials
Headquartered in North Carolina, Martin Marietta Materials, Inc. (MLM) provides building materials to the construction industry globally. Its products include crushed stone, ready-mixed concrete, asphalt, paving products, and cement. These materials are used in various construction projects such as infrastructure, residential and non-residential buildings, as well as in industries like railroad, agriculture, utility, and environmental sectors. The company’s market cap currently stands at $35.2 billion.
Shares of Martin Marietta have surged nearly 41% over the past 52 weeks, outperforming the broader SPX’s rally during the same period.
On May 16, Martin Marietta declared a quarterly dividend of $0.74 per share, payable to its shareholders on June 28. The company holds an 8-year track record of consecutive dividend increases. Its annualized dividend of $2.96 per share translates to a 0.53% dividend yield.
In terms of valuation, the stock is trading at 26.47 times forward earnings, which is in line with its own five-year average of 26.68x.
On April 30, the company reported its Q1 earnings results. While the company’s revenue of $1.3 billion fell short of analyst estimates, its adjusted EPS of $1.93 topped forecasts. Moreover, during the quarter, the company returned approximately $197 million to shareholders through dividend payments and share repurchases.
Chairman and CEO Ward Nye said, “Martin Marietta completed over $4.5 billion of portfolio-enhancing transactions thus far in 2024, increased our aggregates gross profit per ton by over 14 percent for the quarter, and achieved record quarterly gross profit in our Magnesia Specialties business - all notwithstanding the year's weather-challenged start in our most profitable markets. Collectively, these notable accomplishments give us confidence in our ability to increase our full-year 2024 Adjusted EBITDA guidance to $2.37 billion at the midpoint.”
Analysts tracking Martin Marietta project the company’s profit to reach $21.88 per share in fiscal 2024, up 13.3% year over year, and grow another 10.4% to $24.15 per share in fiscal 2025.
Martin Marietta stock has a consensus “Moderate Buy” rating overall. Out of the 16 analysts offering recommendations for the stock, 10 suggest a “Strong Buy,” two advise a “Moderate Buy,” and the remaining four give a “Hold” rating.
The average analyst price target of $646.67 indicates a potential upside of 14.7% from the current price levels. However, the Street-high price target of $737 suggests a modest potential upside of 30.7%.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
