As investors face the uncertainty around midterm election results and turmoil in cryptocurrency markets, U.S. stocks fell on Wednesday, snapping a three-day winning streak. The stock market has experienced wild swings this year amid ongoing macroeconomic and geopolitical issues.
Amid the Fed’s consecutive rate hikes, gross national debt in America has hit new heights, surpassing $31 trillion, according to a recent U.S. treasury report. The dramatic rise in interest rates over the past few months are causing considerable economic damage and financial market stress.
Moreover, about 90% of the 400 CEOs surveyed by KPMG last month believe that a downturn is coming.
Given this backdrop, Wall Street favorites Microsoft Corporation (MSFT), Pfizer Inc. (PFE), and The Coca-Cola Company (KO) might be ideal investments now. These stocks are well-positioned and have a reliable dividend-paying record.
Microsoft Corporation (MSFT)
MSFT is a tech giant that develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On October 20, MSFT and UBS Group AG (UBS) announced a landmark expansion of their partnership to accelerate UBS’s public cloud footprint over the next five years. MSFT’s rich set of productivity and collaboration tools would enable UBS to increase the speed at which it can deliver and improve upon its digital experiences for clients and employees.
On October 12, it was reported that MSFT and Mercedes-Benz collaborated on a new MO360 Data Platform to make vehicle production more efficient, resilient, and sustainable where Benz is connecting its around 30 passenger car plants worldwide to the Microsoft cloud, enhancing transparency and predictability across its digital production and supply chain.
The platform is already available to teams in EMEA and will be deployed in the United States and China.
On September 20, MSFT declared a quarterly dividend of $0.68 per share, payable to shareholders on December 8, reflecting a 10% increase over the previous quarter’s dividend.
Its annual dividend of $2.72 yields 1.21% on current prices. The company’s dividend payouts have increased at a 10.5% CAGR over the past three years and a 9.7% CAGR over the past five years. The company has a record of 17 years of consecutive dividend growth.
MSFT’s total revenue increased 10.6% year-over-year to $50.12 billion in the fiscal first quarter that ended September 30. Its operating income grew 6.3% from the year-ago value to $21.52 billion. The company’s net income and net earnings per common share amounted to $17.56 billion and $2.35, respectively.
The consensus EPS estimate of $2.56 for the fourth fiscal quarter ending June 2023 indicates a 14.7% improvement year-over-year. Its consensus revenue of $56.65 billion for the same quarter represents a rise of 9.2% year-over-year. MSFT has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 4.8% over the past five days to close its last trading session at $224.51.
MSFT’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MSFT is rated a B in Stability and Quality. Within the Software – Business industry, it is ranked #9 out of 54 stocks.
To see additional POWR Ratings for Growth, Value, Momentum, and Sentiment for MSFT, click here.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, as well as disease control and prevention centers.
On October 20, PFE and Erasca, Inc. (ERAS) announced a clinical trial collaboration and supply agreement for the CDK4/6 inhibitor palbociclib. This agreement is expected to fund a clinical proof-of-concept study of ERAS-007, an oral ERK1/2 inhibitor, in combination with palbociclib for treating patients with KRAS- and NRAS-mutant colorectal cancer and KRAS-mutant pancreatic ductal adenocarcinoma.
This agreement should bolster its capabilities and be beneficial amid the rising cancer cases worldwide.
On October 5, PFE announced that it had completed the acquisition of Global Blood Therapeutics, Inc. (GBT), a biopharmaceutical company that deals with sickle cell disease (SCD). The acquisition reinforces Pfizer’s commitment to SCD, building on a 30-year legacy in the rare hematology space.
On September 22, PFE declared a quarterly dividend of $0.40 per share on its common stock, which was payable to shareholders on December 5. Its annual dividend of $1.60 yields 3.42% on current prices. The company’s dividend payouts have increased at a 5.5% CAGR over the past three years and a 5.7% CAGR over the past five years. The company has a record of 12 years of consecutive dividend growth.
During the fiscal third quarter ended September 2022, PFE’s income from continuing operations improved 5.8% year-over-year to $8.65 billion. Its non-GAAP net income attributable to Pfizer Inc. common shareholders rose 39.7% year-over-year to $10.17 billion, while its non-GAAP EPS grew 40.2% year-over-year to $1.78.
Streets expect PFE’s EPS for the current fiscal year ending December 2022 to be $6.44, indicating a 45.7% improvement year-over-year. The company’s revenue is likely to increase 23% year-over-year to $100.02 billion in the same year. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 10.4% over the past month to close its last trading session at $46.72.
This promising outlook is reflected in PFE’s POWR Ratings. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE is rated an A in Value and a B in Growth and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #5 out of 163 stocks.
Click here to see additional POWR Ratings for Stability, Momentum, and Sentiment for PFE.
The Coca-Cola Company (KO)
KO is a popular beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, and energy drinks.
On October 20, KO announced its regular quarterly dividend of $0.44 per common share, payable on December 15. The company pays $1.76 as dividends annually, which translates to a 2.95% yield at the current price, compared to the 4-year average dividend yield of 3.08%.
The company’s dividend has increased at a CAGR of 3.1% over the past three years and at a CAGR of 3.6% over the past five years. The company has raised its dividend for the past 59 years.
For the third quarter of fiscal 2022 ended September 30, KO’s net operating revenue increased 10% year-over-year to $11.1 billion. The company’s non-GAAP gross profit increased 6.5% year-over-year to $6.54 billion. Its non-GAAP net income improved 6.7% year-over-year to $3.01 billion, while non-GAAP net income per common share increased 6.2% from its year-ago value to $0.69.
The consensus EPS estimate of $2.48 for the fiscal year ending December 2022 indicates a 7% improvement year-over-year. The consensus revenue is expected to increase by 10.3% from the prior year to $42.67 billion for the same year. Additionally, KO has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 7.8% over the past month to close its last trading session at $58.77.
It’s no surprise that KO has an overall B rating, which translates to Buy in our proprietary rating system. It is also rated a B in Stability, Sentiment, and Quality. Within the A–rated Beverages industry, it is ranked #22 out of 35 stocks.
To see additional POWR Ratings for Growth, Value, and Momentum for KO, click here.
MSFT shares were trading at $239.23 per share on Thursday morning, up $14.72 (+6.56%). Year-to-date, MSFT has declined -28.40%, versus a -17.17% 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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