The equity markets have been under pressure lately due to skyrocketing inflation and recession prospects due to the tightening of the monetary policy. The Federal Reserve has indicated further hikes this month to fight the surging inflation. Due to the macroeconomic headwinds, the S&P 500 index posted its worst first half since 1970.
Investors have grown increasingly worried about the economy slipping into a recession after the U.S. treasury yields resumed their upward swing. The 2-year yield rose above the 10-year yield, indicating that the economy might have set foot in a recession.
Amid this backdrop, investing in high-yield dividend stocks could help cushion one’s portfolio against market risks by generating a steady income stream. We think fundamentally sound and high dividend-yield stocks Suncor Energy Inc. (SU), MetLife, Inc. (MET), and Broadcom Inc. (AVGO), could be ideal buy and hold candidates for the rest of the year.
Suncor Energy Inc. (SU)
Headquartered in Calgary, Canada, SU operates as an integrated energy company through segments: Oil Sands, Exploration and Production, Refining and Marketing, and Corporate and Eliminations. It primarily focuses on developing petroleum resource basins in Canada’s Athabasca oil sands and crude oil production for Canadian and international markets.
On May 31, 2022, SU announced that, together with joint venture partners, it plans to restart the West White Rose project. The company intends to increase its ownership of the White Rose asset. This should bolster the company’s operational capability.
On May 9, 2022, the company’s Board of Directors recently increased the quarterly dividend by 12% to $0.47 per share. It was paid on June 24, 2022. SU’s four-year average dividend yield is 4.18%, and its current dividend translates to a 4.56% yield. Its dividend has grown at a 5.6% CAGR over the past five years.
SU’s revenues and other income increased 56.3% year-over-year to $13.50 billion in the first quarter of 2022. Its adjusted operating earnings grew 269.3% from the year-ago value to $2.75 billion, while its net earnings increased 259.2% year-over-year to $2.95 billion. Also, its EPS stood at $2.06, up 281.5% from the prior-year period.
Analysts expect SU’s EPS and revenue for the second quarter (ended June 2022) to increase 380.2% and 58.5% year-over-year to $1.84 and $11.50 billion, respectively. Over the past year, the stock has gained 42.2% to close the last trading session at $32.74.
SU’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to 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 an A grade for Momentum and Quality and a B grade for Growth. Within the B-rated Energy - Oil & Gas industry, it is ranked #20 out of 97 stocks. Click here to see the other ratings of SU for Value, Stability, and Sentiment.
MetLife, Inc. (MET)
MET is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits, and asset management to help individual and institutional customers build a more confident future.
On May 4, 2022, the company’s Board of Directors approved a new $3 billion share repurchase authorization. On April 26, 2022, they also increased the common stock dividend by 4.2% from the previous quarter to $0.50 per share, paid on June 14, 2022. This reflects the company’s strong cash flows.
MET’s four-year average dividend yield is 3.66%, and its forward annual dividend of $2 translates to a 3.19% yield. The company has increased its dividend for eight consecutive years. Its dividend has grown at a 6.3% CAGR over the past five years.
For the first quarter ended March 31, 2022, MET’s total revenues increased marginally year-over-year to $15.76 billion. Its net income increased 109% year-over-year to $606 million, while its net income per share rose 121% from the year-ago-value to $0.73.
For fiscal 2023, MET’s EPS and revenue are expected to increase 10.8% and 2.9% year-over-year to $8.22 and $70.13 billion, respectively. MET surpassed the consensus EPS estimates in each of the trailing four quarters.
The shares of MET have gained 10.5% over the past year to close the last trading day at $62.63.
MET’s POWR Ratings reflect solid prospects. The stock has a B grade for Momentum and Sentiment. Also, it is ranked #8 out of 28 stocks in the Insurance - Life industry.
Click here to see the other ratings of MET for Growth, Value, Stability, and Quality.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies a range of semiconductor devices focusing on complex and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. It operates through two segments: semiconductor solutions and infrastructure software.
On May 26, 2022, AVGO announced the acquisition of VMware, Inc. (VMW) for approximately $61 billion in cash and stock. This acquisition should accelerate software scale, growth opportunities for the company, and fuel revenues.
AVGO’s four-year average dividend yield is 3.20%, and its forward annual dividend translates to a 3.29% yield. Its dividends have grown at 17.9% and 34.8% CAGRs over the past three and five years, respectively. The company has increased its dividend for 11 consecutive years.
For the second quarter ended May 1, 2022, AVGO’s net revenue increased 23% year-over-year to $8.10 billion. Its adjusted EBITDA rose 29.1% year-over-year to $5.11 billion, while its non-GAAP net income came in at $4 billion, up 34.2% from its year-ago period. AVGO’s non-GAAP EPS stood at $9.07, indicating a 37% year-over-year increase.
For the third quarter (ending July 2022), AVGO’s revenue is expected to increase 24% year-over-year to $8.41 billion. The Street expects its EPS to increase 37.2% year-over-year to $9.55 in the current quarter. The company surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of AVGO have gained 6% over the past year to close the last trading session at $498.69.
AVGO 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 Quality and a B grade for Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #8 out of 95 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see the AVGO ratings for Value, Momentum, and Stability here.
SU shares fell $0.74 (-2.26%) in premarket trading Monday. Year-to-date, SU has gained 33.41%, versus a -17.56% 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 Stocks to Buy and Hold for the Rest of 2022 StockNews.com
