Central banks worldwide have been raising rates to combat surging inflation. While many economists expect that inflation may have peaked, Federal Reserve Vice Chair Lael Brainard warned against complacency. “Inflation is very high in the United States and abroad, and the risk of additional inflationary shocks cannot be ruled out,” she said.
Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, sees a “long and ugly” recession in the US and globally occurring at the end of 2022. This recession could last all of 2023 and lead to a sharp correction in the S&P 500. The economist further said achieving a 2% inflation rate without a hard landing is going to be “mission impossible” for the Federal Reserve.
Moreover, the United States has already reported two consecutive quarters of gross domestic product (GDP) declines, which is considered an unofficial indicator of recession. However, experts believe staying invested in resilient and dividend-yielding stocks could help generate significant returns in the long run.
With stable fundamentals and compelling dividend payments, Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and Ryerson Holding Corporation (RYI) could be ideal additions to your long-term portfolio.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through the broad segments of Consumer Health; Pharmaceuticals; and MedTech.
On September 15, JNJ announced that its Board of Directors had authorized the repurchase of up to $5 billion of its common stock. Joaquin Duato, Chief Executive Officer, said, “With our strong cash flow and lowest level of net debt in five years, we have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns and drive long-term growth.”
JNJ’s forward annual dividend of $4.52 per share yields 2.77% on the current price. The company’s dividend payouts have increased at a CAGR of 6% over the past five years.
JNJ’s gross profit increased 2.4% year-over-year to $16.10 billion in the second quarter that ended June 30. Its sale to customers grew 3% from the year-ago value to $24.02 billion, while its adjusted net earnings improved 4.3% year-over-year to $6.91 billion. The company’s adjusted net earnings per common share increased 4.4% from its year-ago value to $2.59.
The consensus EPS estimate of $10.08 for the fiscal year ending December 2022 indicates a 2.8% improvement year-over-year. The consensus revenue estimate of $95.53 billion is expected to increase 1.9% year-over-year for the same year. Additionally, JNJ has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 1.7% over the past year.
JNJ’s POWR Ratings reflect this promising outlook. The company's overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JNJ is rated an A in Stability and a B in Growth and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #1 out of 165 stocks.
Beyond what we’ve stated above, we have also given grades for Value, Momentum, and Sentiment for JNJ. Get all JNJ ratings 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 September 29, PFE and BioNTech SE (BNTX) submitted a variation to the marketing authorization (MA), which seeks to expand the label of their bivalent BA.4/BA.5 Omicron-targeting COVID-19 vaccine for use in children aged five through 11 years. This vaccine is expected to boost the companies’ revenues in the future.
Moreover, on September 13, 2022, PFE and Strata Oncology, Inc. announced the expansion of their clinical collaboration in the Strata Precision Indications for Approved THerapies (Strata PATHTM) trial that is a prospective pan-tumor therapeutic trial designed to evaluate the efficacy and safety of multiple FDA-approved cancer therapies in new, biomarker-guided patient populations. Such collaborations should benefit the company.
PFE’s $1.60 per share forward annual dividend yields 3.62% on the current price. The company’s dividends have grown at a 5.9% CAGR over the past five years.
PFE’s revenue increased 46.8% year-over-year to $27.74 billion in the second quarter ended July 3. Its income from continuing operations grew 69.6% from the year-ago value to $9.88 billion, while its adjusted income improved 93.5% year-over-year to $11.66 billion. The company’s adjusted earnings per common share increased 92.5% from its year-ago value to $2.04.
Street estimate of $1.35 for the fourth fiscal quarter ending December 2022 indicates a 24.7% improvement year-over-year. Analysts expect its revenue to rise 3.5% year-over-year to $24.66 billion for the same quarter. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 2.8% over the past year.
It’s no surprise that PFE has an overall A rating which translates to a Strong Buy in our POWR Ratings system.
PFE is rated an A in Value and a B in Quality. Within the Medical – Pharmaceuticals industry, it is ranked #12 out of 165 stocks.
To see additional POWR Ratings for Growth, Momentum, and Stability for PFE, click here.
Ryerson Holding Corporation (RYI)
RYI is a value-added processor and distributor of industrial metals like carbon, stainless, and alloy steels, aluminum, nickel, and red metals in various shapes and forms. Along with its subsidiaries, the company operates in the United States, Canada, Mexico, and China.
On September 2, 2022, RYI acquired Howard Precision Metals, Inc., the largest aluminum distributor in the Midwest. Mike Burbach, Ryerson’s Chief Operating Officer, said, “Its processing capabilities complement Ryerson’s existing non-ferrous franchise, and we are excited to recognize these synergies.”
RYI’s forward annual dividend of $0.46 per share yields 1.65% on its current price.
For the second quarter that ended June 30, 2022, RYI’s net sales increased 22.9% year-over-year to $1.74 billion. Its gross profit grew 81.3% from the prior-year period to $465.90 million. The company’s adjusted EBITDA rose 221.8% from the year-ago value to $298 million.
RYI’s EPS estimate of $13.02 for its fiscal 2022 represents a 74.5% improvement year-over-year. The revenue estimate of $6.23 billion for the current year indicates a 9.8% increase from the same period last year. Additionally, the company has an excellent record of surpassing the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 29.5% over the past three months and 24.5% year-to-date.
RYI’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked #2 out of 36 stocks in the B-rated Industrial – Metals industry.
Click here to see the other ratings of RYI for Momentum and Stability.
JNJ shares rose $0.27 (+0.17%) in premarket trading Tuesday. Year-to-date, JNJ has declined -2.72%, versus a -21.92% 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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