The December jobs report showcased that wage growth has moderated, signaling that the Federal Reserve’s interest rate hikes are having their intended effect. The stock market rallied, and investors rejoiced in hopes that inflation may be cooling.
However, economists expect this data would not deter the Fed from hiking rates when it meets in February. Mike Loewengart, head of model portfolio construction for Morgan Stanley’s Global Investment Office, said, “I don’t think this is going to sway the Fed from a few additional raises going forward, but it no doubt is encouraging to see a moderation in wages.”
On the other hand, the head of the International Monetary Fund warned that this year is going to be “tougher than the year we leave behind,” with a third of the world’s economy expected to be in recession.
Therefore, it’s likely to lead to choppy markets. The Fed officials at their last meeting vowed to continue its aggressive stance to curb inflation until the desired inflation level is attained, thereby intensifying fears of a global recession.
With uncertainty becoming the norm of the day, investors could invest in high-yield dividend stocks Gilead Sciences, Inc. (GILD), KT Corporation (KT), and Sisecam Resources LP (SIRE) to navigate the sea of market volatility with some steady income stream.
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company focusing on developing and commercializing medicine for treating life-threatening diseases, including HIV, viral hepatitis, and cancer.
On January 3, 2022, GILD announced that the European Medicines Agency (EMA) had validated the Marketing Authorization Application (MAA) for Trodelvy to treat adult patients with pre-treated HR+/HER2- metastatic breast cancer. Given the limited treatment options, this plays a significant role in making Trodelvy accessible to more patients across the EU.
On the same day, GILD and EVOQ Therapeutics, Inc. announced a collaboration and licensing agreement to advance EVOQ’s proprietary technology for treating rheumatoid arthritis (RA) and lupus. Under the agreement, GILD would receive the rights to exclusively license EVOQ’s NanoDisc technology to develop and commercialize immunotherapy products clinically.
The company’s annual dividend of $2.92 yields 3.32% at the current price level. Its dividend payouts have increased at a 5% CAGR over the past three years and a 7% CAGR over the past five years. GILD has a record of seven years of consecutive dividend growth.
GILD’s total product sales, excluding Veklury, increased 11% year-over-year to $6.05 billion for the fiscal third quarter that ended September 30, 2022. The company’s non-GAAP attributable net income and non-GAAP EPS amounted to $2.39 billion and $1.90 for the same period.
Its current liabilities declined 7.9% to $62.56 billion for the period that ended September 30, 2022, compared to $67.95 billion for the fiscal year that ended December 31, 2022.
For the quarter that ended December 31, 2022, GILD’s EPS is expected to increase 116% year-over-year to $1.49. It has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 44.8% to close the last trading session at $88.08.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Value, Sentiment, and Quality. Out of the 390 stocks in the Biotech industry, it is ranked #5. Click here to see the other ratings of GILD for Growth, Momentum, and Stability.
KT Corporation (KT)
Headquartered in South Korea, KT provides telecommunications and platform services. The company operates through four segments: Information and Communications Technologies; Finance; Satellite Broadcasting; and Others.
It offers fixed-line telephone services, broadband internet connection services, media and content services, data-communication services, financial services, and other services.
In September 2022, KT announced its plans to expand its relationship with the Hyundai Motor Group to promote the advancement of vehicle technology. This should enhance the company’s global market presence.
The company’s four-year average dividend yield is 4.66%, and its current dividend of $0.75 translates to a 5.5% yield on prevailing prices. Its dividends have grown at a 16.7% CAGR over the past three years and a 16.6% CAGR over the past five years.
KT’s operating revenue increased 4.2% year-over-year to KRW 6.48 trillion ($5.15 billion) for the third quarter that ended September 30, 2022. Its operating income grew 18.4% from the year-ago value to KRW 452.90 billion ($360.28 million), while its EBITDA increased 6.4% year-over-year to KRW 1.36 trillion ($1.08 billion).
The consensus revenue estimate of $20.20 billion for the fiscal year 2022 (ended December 2022) represents a 31.2% increase from the same period last year. Over the past three months, the stock has gained 10.8% to close the last trading session at $13.68.
KT’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. It also has an A grade for Value and Stability. Among 46 stocks in the A-rated Telecom - Foreign industry, it is ranked #3.
Click here to access the additional ratings for KT (Growth, Momentum, Sentiment, and Quality).
Sisecam Resources LP (SIRE)
SIRE is engaged in trona ore mining and soda ash production with its facility in the Green River basin of Wyoming. It processes trona ore into soda ash, an essential raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products.
SIRE’s trailing-12-month EBIT margin and levered FCF margin of 17.58% and 6.48% are 29.1% and 26.4% higher than the industry averages of 13.62% and 5.13%, respectively. Its trailing-12-month ROCE of 29.64% is 133.3% higher than the industry average of 12.70%.
SIRE’s four-year dividend yield is 7.15%, and its current dividend translates to an 8.9% yield. The company’s dividend payouts have grown at a CAGR of 10.6% over the past three years. It paid a quarterly dividend of $0.50 per share on November 17, 2022.
For the fiscal third quarter that ended September 30, 2022, SIRE’s net sales increased 40.5% year-over-year to $190.50 million. The company’s operating income rose 295.2% year-over-year to $32.80 million, while its adjusted EBITDA attributable to SIRE increased 69.2% from the year-ago value to $20.30 million.
Also, its net income attributable to SIRE grew 108.1% year-over-year to $15.40 million. In addition, its EPS came in at $0.76, representing an increase of 111.1% from the same quarter last year.
Shares of SIRE have gained 25.2% over the past six months to close the last trading session at $22.41.
SIRE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It also has an A grade for Growth and Quality and a B for Value, Stability, and Sentiment. Within the B-rated Chemicals industry, it is ranked first out of 90 stocks. To see SIRE’s rating for Momentum, click here.
GILD shares were trading at $85.63 per share on Monday afternoon, down $2.45 (-2.78%). Year-to-date, GILD has declined -0.26%, versus a 2.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
3 High-Yield Dividend Stocks to Buy in a Sea of Market Volatility StockNews.com
