The stock market endured a challenging 2022 due to several macroeconomic and geopolitical challenges. Although inflation eased for two consecutive months, in October and November, minutes from the Federal Reserve’s December policy meeting show that the participants do not think that it would be correct to reduce the federal funds rate target in 2023.
The Fed’s stance looks justified as the U.S. jobless claims for the week ended December 31, 2022, fell to their lowest level in more than three months, signaling continued tightness in the labor market.
With the policymakers still focused on continuing interest rate hikes, the stock market is not expected to stabilize anytime soon. Therefore, it could be wise to invest in shares of companies whose products enjoy inelastic demand irrespective of the economic cycle.
To that end, investors might consider stable and dividend-paying stocks Johnson & Johnson (JNJ), The Procter & Gamble Company (PG), and AptarGroup, Inc. (ATR). The dividends paid by these companies should help cushion one’s portfolio.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. It operates under three segments: Consumer Health, Pharmaceutical, and MedTech.
Over the last three years, JNJ’s dividend payouts have grown at a 5.9% CAGR. Its four-year average dividend yield is 2.60%, and its forward annual dividend of $4.52 per share translates to a 2.57% yield. It is expected to pay a quarterly dividend of $1.13 per share on March 7, 2023.
On December 22, 2022, JNJ announced the completion of its acquisition of Abiomed. JNJ’s CEO, Joaquin Duato, said, “This acquisition marks another important step on Johnson & Johnson’s path to accelerating growth in our MedTech business and delivering innovative medical technologies to more people around the world.”
JNJ’s sales to customers for the third quarter ended October 2, 2022, increased 1.9% year-over-year to $23.79 billion. Its net earnings increased 21.6% from the year-ago value to $4.46 billion. The company’s EPS came in at $1.68, representing an increase of 22.6% year-over-year.
For the quarter ended December 31, 2022, JNJ’s EPS is expected to increase 5.1% year-over-year to $2.24. Its revenue for the quarter ending March 31, 2023, is expected to increase 1.5% year-over-year to $23.78 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 9.6% to close the last trading session at $175.58.
JNJ’s strong fundamentals are reflected in its POWR Ratings. The company 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.
In addition, it has an A grade for Stability and a B for Value, Sentiment, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #2 of 164 stocks.
Click here to see the additional POWR Ratings of JNJ for Growth and Momentum.
The Procter & Gamble Company (PG)
PG provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
Over the last three years, PG’s dividend payouts have grown at a 6.9% CAGR. Its four-year average dividend yield is 2.45%, and its forward annual dividend of $3.65 per share translates to a 2.40% yield.
PG’s net sales for the first quarter ended September 30, 2022, increased 1.3% year-over-year to $20.61 billion. Its current assets came in at $22.52 billion, compared to $21.65 billion for the fiscal year ended June 30, 2022. Moreover, the company’s net EPS came in at $1.57, and its net earnings attributable to PG came in at $3.94 billion.
Analysts expect PG’s EPS for the quarter ending March 31, 2023, to increase 1.9% year-over-year to $1.36. Its revenue for fiscal 2024 is expected to increase 3.6% year-over-year to $82.83 billion. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past three months, the stock has gained 22.3% to close the last trading session at $152.04.
It’s no surprise that PG has an overall rating of B, which equates to a Buy in our POWR Rating system. Within the Consumer Goods industry, it is ranked #14 out of 59 stocks. It has an A grade for Stability and a B for Sentiment and Quality.
Click here to see the additional PG ratings for Growth, Value, and Momentum.
AptarGroup, Inc. (ATR)
ATR provides a range of dispensing, sealing, and material science solutions primarily for the beauty, personal care, home care, prescription drug, consumer health care, injectable, and food and beverage markets. The company operates through three segments: Aptar Pharma, Aptar Beauty, and Aptar Closures.
On December 12, 2022, ATR announced that it would realign two of its business reporting segments effective from January 1, 2023. ATR’s two renamed reporting segments would be Aptar Closures and Aptar Beauty. This new segment structure would help the company streamline its operations and improve efficiencies while building a strong customer focus across all closure applications.
ATR’s President and CEO Stephan B. Tanda said, “We are taking a strategic step that will strengthen our competitive position by simplifying and focusing our organization.”
Over the last three years, ATR’s dividend payouts have grown at a 2.3% CAGR. Its four-year average dividend yield is 1.26%, and its forward annual dividend of $1.52 per share translates to a 1.33% yield. ATR paid a quarterly dividend of $0.38 per share on November 16, 2022.
ATR’s net sales increased 1.4% year-over-year to $836.86 million for the third quarter ended September 30, 2022. Its adjusted EBIT rose 1.3% year-over-year to $96.14 million.
The company’s adjusted net income attributable to ATR increased 9.7% from the prior-year period to $63.07 million. In addition, its adjusted EPS came in at $0.95, representing an increase of 11.8% year-over-year.
Analysts expect ATR’s revenue for fiscal 2022 to increase 2.6% year-over-year to $3.31 billion. Its EPS for the quarter ending June 30, 2023, is expected to increase 4.5% year-over-year to $1. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 20.6% to close the last trading session at $113.33.
ATR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B for Sentiment and Quality. Within the A-rated Industrial – Packaging industry, it is ranked #12 out of 22 stocks. To see the other ratings of ATR for Growth, Value, and Momentum, click here.
JNJ shares were trading at $175.05 per share on Tuesday morning, down $0.53 (-0.30%). Year-to-date, JNJ has declined -0.91%, versus a 1.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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