The stock market experienced a freefall yesterday to register its worst day of losses this year, following the prior day’s rally after the Fed raised interest rates by 50 basis points. Worries about the economy slipping into recession with the Fed’s monetary tightening precipitated the selloff. CNBC’s Jim Cramer said, “Right now, I think a curious mind would be buying stocks selectively, not selling them indiscriminately.” Caution is therefore the theme until the market absorbs a high interest-rate environment.
Investors looking to dodge potential market fluctuations on lingering concerns over macroeconomic and geopolitical issues could bet on high-yielding dividend stocks now. The ability to pay high dividends amid such uncertainties indicates their financial strength, which could help them stay afloat. Furthermore, investors could generate a steady income stream because of their dividend payouts. Investors’ interest in high-dividend stocks is evident in the iShares Core High Dividend ETF’s (HDV) 6.5% returns over the past six months.
Therefore, we think high dividend-yielding stocks GlaxoSmithKline plc (GSK), A.P. Møller - Mærsk A/S (AMKBY), and Eni S.p.A. (E) could be safer bets at this juncture.
GlaxoSmithKline plc (GSK)
Headquartered in Brentford, U.K., GSK, and its subsidiaries create, discover, develop, manufacture, and market pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products in the U.K., the U.S., and internationally. Its four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On April 27, 2022, Emma Walmsley, GSK’s CEO, said, “Our results reflect further good momentum across specialty medicines and vaccines, including the return to strong sales growth for Shingrix and continuing pipeline progress. We also continue to see very good momentum in Consumer Healthcare, demonstrating strong potential of this business ahead of its proposed demerger in July, to become Haleon.”
GSK has been paying dividends for 13 consecutive years. GSK’s dividend payouts have grown at a 10.9% CAGR over the past three years. Its current dividend translates to a 4.87% yield, while its four-year average yield is 5.22%. On May 4, 2022, GSK declared a quarterly dividend of $0.35 per share.
GSK’s turnover came in at £9.78 billion ($12.08 billion) for the first quarter, ended March 31, 2022, up 31.8% year-over-year. Its operating profit came in at £2.80 billion ($3.46 billion), up 65.4% year-over-year. Also, the company’s profit attributable to shareholders increased 67.9% year-over-year to £1.80 billion ($2.23 billion), while its EPS came in at 35.60p, up 67.1% year-over-year.
GSK’s revenue is expected to increase 2.3% to $46.93 billion in 2023. Its EPS is estimated to increase 8.2% per annum over the next five years. It surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 17.5% in price to close yesterday’s trading session at $44.39.
GSK’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Value and Stability. It is ranked #11 of 167 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for GSK (Growth, Momentum, Sentiment, and Quality).
Click here to checkout our Healthcare Sector Report for 2022
A.P. Møller - Mærsk A/S (AMKBY)
Based in Copenhagen, Denmark, AMKBY operates worldwide as an integrated transport and logistics company. Its segments are Ocean; Logistics & Services; Terminals & Towage; and Manufacturing & Others.
On May 4, 2022, AMKBY’s CEO, Søren Skou said, “In Q1 we delivered the best earnings quarter ever in A.P. Moller - Maersk with growth across Ocean, Logistics and Terminals. The increased earnings are driven by freight rates and by contracts being signed at higher levels. While global supply chains remain under significant pressure, we continue to demonstrate superior ability to help customers overcome logistic challenges.”
AMKBY has been paying dividends for nine consecutive years. AMKBY’s dividend payouts have grown at a 154.2% CAGR in the past three years. Its current dividend translates to a 12.25% yield, while its four-year average yield is 5.70%.
AMKBY’s revenue increased 55.1% year-over-year to $19.29 billion for the first quarter, ended March 31, 2022. Its EBIT came in at $7.27 billion, up 134.8% year-over-year. The company’s cash flow from operating activities came in at $8.22 billion, compared to $3.43 billion, for the same period.
Analysts expect AMKBY’s revenue to be $75.36 billion for its fiscal period ending Dec. 31, 2022, representing a 22% year-over-year rise. Over the past year, the stock gained 16.4% in price to close yesterday’s session at $15.11.
It is no surprise that AMKBY has an overall A rating, which equates to a Strong Buy in our POWR Rating system.
It has an A grade for Growth and Value and a B grade for Momentum and Quality. It is ranked first in the A-rated Shipping industry. Click here to see the additional POWR Ratings for Stability and Sentiment for AMKBY.
Eni S.p.A. (E)
Headquartered in Rome, Italy, E explores, develops, and produces crude oil and natural gas. It operates through Exploration & Production; Global Gas & LNG Portfolio; Refining and Marketing and Chemicals; Plenitude and Power; and Corporate and Other activities segments.
E has been paying dividends for more than 12 consecutive years. Its current dividend translates to a 6.57% yield, while its four-year average yield is 6.17%.
For the first quarter, ended March 31, 2022, E’s adjusted operating profit increased 293% year-over-year to €5.19 billion ($5.49 billion). Its adjusted net profit came in at €3.27 billion ($3.46 billion), up 1,111.1% year-over-year, while its EPS came in at €0.91, up 1,037.5% year-over-year.
E’s revenue is expected to increase 20.9% year-over-year to $104.84 billion for the fiscal period ending Dec. 31, 2022. Its EPS is estimated to increase 19.5% per annum for the next five years. Over the past year, the stock has gained 14.7% in price to close yesterday’s trading session at $28.49.
It is no surprise that E has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Momentum and a B grade for Growth and Sentiment.
E is ranked #5 of 42 stocks in the A-rated Foreign Oil & Gas industry. Click here to see the additional POWR Ratings for E (Value, Stability, and Quality).
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GSK shares were trading at $44.18 per share on Friday morning, down $0.21 (-0.47%). Year-to-date, GSK has gained 1.59%, versus a -12.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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