Persistent inflation and the Fed’s subsequent aggressive interest rate hikes to tame it have affected the stock market significantly this year.
However, investment professionals surveyed in Bankrate’s Fourth-Quarter Market Mavens survey see some relief coming investors’ way in 2023. The analysts expect the S&P 500 to increase by 8% over the next 12 months. Moreover, analysts expect the S&P 500’s earnings to rise 4.4% in 2023, according to Refinitiv IBES.
On the other hand, the Conference Board’s consumer confidence index rose to 108.3 in December, marking a sharp rebound, and pushing the index to its highest level since April, despite the Fed’s rate hikes and looming recession fears.
Therefore, fundamentally sound growth stocks CVS Health Corporation (CVS), Archer-Daniels-Midland Company (ADM), and Spok Holdings, Inc. (SPOK) that pays consistent dividends might be solid additions to your retirement portfolio.
CVS Health Corporation (CVS)
CVS provides health services in the United States. The company operates through three segments: Health Care Benefits; Pharmacy Services; and Retail/LTC.
On December 1, CVS opened its first MinuteClinic locations in northern Delaware, expanding its presence. MinuteClinic, the medical clinics inside select CVS Pharmacy stores, offers high-quality, affordable, and convenient care for various acute and chronic conditions for patients ages 18 months and older.
On December 15, CVS announced that its board of directors had approved a 10% increase in its quarterly dividend to 60.5 cents a share, payable February 1. Its annual dividend of $2.42 per share yields 2.60% at the current price. Its dividends grew at 3.2% CAGR over the past three years.
Moreover, over the past three years, CVS’ revenue and EBIT have grown at CAGRs of 8.9% and 7.2%, respectively.
CVS’ trailing-12-month EBITDA margin of 6.08% is 63.09% higher than the industry average of 3.73%. Moreover, its trailing-12-month ROCE and ROTC of 4.35% and 6.26% compare with their industry averages of negative 39.73% and 21.95%.
CVS’ total revenues increased 10% year-over-year to $81.16 billion during the fiscal 2022 third quarter ended September 30, 2022. Its adjusted operating income increased by 3.9% from the prior-year period to $4.23 billion. In addition, the company’s adjusted earnings per share rose 6.1% year-over-year to $2.09.
Analysts expect CVS’ revenue and EPS to rise 7.7% and 2.6% from the prior year to $314.49 billion and $8.62, respectively, in the current fiscal year ending December 2022. The company has also surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock declined marginally intraday to close the last trading session at $93.02. CVS has a 24-month beta of 0.64.
CVS’ POWR Ratings reflect its strong fundamentals. The stock has an overall rating of A, which translates to 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. It is ranked first among the four stocks in the B-rated Medical – Drug Stores industry.
In addition, we have also given CVS grades for Value, Momentum, and Quality. Get all CVS ratings here.
Archer-Daniels-Midland Company (ADM)
ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients worldwide. The company operates through three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition.
On November 2, ADM declared a cash dividend of 40.0 cents per share on the company’s common stock, payable on December 7, 2022. Its four-year average dividend yield is 2.75%, and its forward annual dividend of $1.60 per share translates to a 1.67% yield. Over the last three years, ADM’s dividend payouts have grown at a 4.6% CAGR.
Over the past three years, its revenue and EBIT have grown at CAGRs of 15.4% and 40%, respectively.
ADM’s trailing-12-month Asset Turnover ratio of 1.78% is 116.49% higher than the 0.82% industry average. Moreover, its trailing-12-month ROCE and ROTC of 17.85% and 8.01% compare with their industry averages of 10.59% and 6.17%.
In the fiscal third quarter ended September 30, 2022, ADM’s revenues increased 21.4% year-over-year to $24.68 billion. Its adjusted net earnings increased 91.2% year-over-year to $1.05 billion. Additionally, its adjusted EBITDA increased 58.5% year-over-year to $1.64 billion, while its adjusted EPS rose 91.8% from the prior-year quarter to $1.86.
ADM’s EPS and revenue are expected to increase 45.4% and 18.6% year-over-year to $7.54 and $101.08 billion, respectively, in the current fiscal year ending December 2022. The company has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 45.2% over the past year to close the last trading session at $95.91. It has a 24-month beta of 0.66.
It is no surprise that ADM has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Sentiment and Quality. It is ranked #3 out of 28 stocks in the Agriculture industry.
Click here to see the additional ADM ratings for Value, Momentum, and Stability.
Spok Holdings, Inc. (SPOK)
SPOK provides healthcare communication solutions worldwide. It delivers clinical information to care teams to enhance patient outcomes. The company offers subscriptions to one-way or two-way messaging services and ancillary services and sells devices to resellers.
In addition, the company provides professional software license updates and product support services, as well as sells third-party equipment.
On October 26, SPOK declared a regular quarterly dividend of $0.31 per share, payable on December 9, 2022. Its annual dividend of $1.25 yields 15.17 on current prices, which is higher than its four-year average dividend yield of 6.22%. Its dividend has increased at a CAGR of 35.7% over the past three years.
SPOK’s trailing-12-month Asset Turnover ratio of 0.55% is 12.66% higher than the 0.49% industry average. Moreover, its trailing-12-month gross profit margin of 66.14% is 31.46% higher than the industry average of 50.32%.
SPOK’s net income increased 217.1% year-over-year to $2.92 million in the third quarter ended September 30, 2022. The company’s adjusted operating expenses declined 29.2% year-over-year to $27.87 million. Its adjusted EBITDA increased 286.6% year-over-year to $4.66 million. In addition, its net EPS increased 215.4% from the year-ago period to $0.15.
Street expects SPOK’s EPS to rise 40% year-over-year to $0.14 in the fiscal second quarter ending June 30, 2023.
Over the past six months, the stock has gained 22.3% to close the last trading session at $8.24. The stock has a 24-month beta of 0.30.
SPOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Sentiment and Quality. In addition, it is ranked #2 out of 19 stocks in the Telecom – Domestic industry.
Click here to access additional ratings of SPOK for Value, Momentum, and Stability.
CVS shares were trading at $92.98 per share on Wednesday morning, down $0.04 (-0.04%). Year-to-date, CVS has declined -7.83%, versus a -18.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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