The stock market's performance has been dismal since the beginning of the year. The consumer price index for January is expected to rise 7.2% year-over-year, its highest increase since 1982. And with an interest rate expected imminently, the market’s dour mood could continue for an extended period. However, hope for a market rebound is widespread because the global logistical gridlock is gradually easing.
Dividend stocks whose companies have robust financials are good bets amid such market uncertainty because they ensure a steady income stream irrespective of market movements. However, one should ensure limited downside risk before betting on a dividend stock.
Dividend-paying stocks Mitsubishi UFJ Financial Group, Inc. (MUFG), Banco Santander, S.A. (SAN), and Aegon N.V. (AEG) have achieved a solid run amid current market volatility, and their fundamental strength should help them continue advancing. So, we think these stocks could be solid bets now. These companies have an overall B (Buy) rating in our POWR Ratings system.
Mitsubishi UFJ Financial Group, Inc. (MUFG)
Headquartered in Tokyo, Japan, bank holding company MUFG provides financial services in Japan, the United States, and Asia/Oceania. It is one of the world's leading financial groups.
Over the last five years, MUFG’s dividend payout has grown at a 6.87% CAGR. While the four-year average dividend yield for MUFG is 4.19%, its current dividend translates to a 3.61% yield.
MUFG’s profits came in at ¥1.13 trillion ($9.77 billion) for the nine months ended Dec. 31, 2021, up 69% year-over-year. Its comprehensive income was ¥1.35 trillion ($11.72 billion), up 25.5% year-over-year. And its total assets came in at ¥365.78 trillion ($3.16 trillion) for the period ended Dec. 31, 2021, compared to ¥359.47 trillion ($3.11 trillion) for the period ended March 31, 2021.
MUFG’s EPS is expected to grow 18.9% per annum over the next five years. Over the past month, the stock has gained 10.2% in price to close yesterday’s trading session at $6.58.
MUFG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
MUFG has an A grade for Momentum and Sentiment and a B for Stability. Within the B-Rated Foreign Banks industry, it is ranked #16 of 97 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Quality for MUFG.
Banco Santander, S.A. (SAN)
Headquartered in Madrid, Spain, SAN and its subsidiaries provide various retail and commercial banking products and services to individuals, small- and medium-sized enterprises, and large companies worldwide.
SAN’s current dividend translates to a 2.28% yield.
For its fiscal fourth quarter, ended Dec. 31, 2021, SAN’s consolidated profit increased 4.4% sequentially to €2.66 billion ($3.04 billion). In addition, the company’s total assets came in at €1.6 trillion ($1.82 trillion) for the period ended Dec.31, 2021, versus €1.51 trillion ($1.72 trillion) for the prior year period. Also, its cash and cash balances were €210.69 billion ($240.88 billion), compared to €153.84 billion ($175.88 billion), for the same period.
SAN’s revenue is expected to be $52.95 billion in its fiscal 2022, representing a 3.6% year-over-year rise. The company’s EPS is expected to increase 187.8% per annum for the next five years. Over the past month, the stock has gained 10.1% to close yesterday’s trading session at $3.94.
It is no surprise that SAN has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Momentum and a B grade for Value and Stability.
SAN is ranked #3 in the Foreign Banks industry. Click here to see the additional POWR Ratings for SAN (Growth, Sentiment, and Quality).
Aegon N.V. (AEG)
Headquartered in The Hague, the Netherlands, AEG provides a range of financial services in the Americas, Europe, and Asia. Its insurance products include life, accident, and health insurance; property and casualty insurance; household and car insurance, and pension products.
On Feb. 9, 2022, Lard Friese, CEO, said, “We continued to invest in the expansion of our distribution network while simultaneously improving the digital experience for customers, advisers, and employers. This resulted in solid growth in our U.S. Life business, record-high asset balances in our Dutch mortgage and defined contribution businesses, and U.K. platform net deposits turning positive. In asset management, we recorded our tenth consecutive year of positive third-party net deposits.”
While AEG's four-year average dividend yield is 4.90%, its current dividend translates to a 3.01% yield. AEG has targeted a dividend per common share of approximately €0.25 for 2023.
AEG’s net income increased 94.1% year-over-year to €526 million ($601.37 million) for its fiscal fourth quarter of 2021. The company’s total gross deposits increased 56.2% year-over-year to €69.03 billion ($78.92 billion). Also, its free cash flow came in at €417 million ($476.75 million), compared to €61 million (69.74 million) in the previous period.
For its fiscal 2022, analysts expect AEG’s revenue to be $32.51 billion. In addition, the company’s EPS is expected to increase 38.4% per annum for the next five years. The stock has gained 15.4% in price year-to-date to close yesterday’s trading session at $5.70.
AEG’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Value, Momentum, Stability, and Sentiment.
Click here to see AEG’s rating for Growth and Quality as well. AEG is ranked #5 of 29 stocks in the B-Rated Insurance - Life industry.
MUFG shares were trading at $6.57 per share on Thursday morning, down $0.01 (-0.15%). Year-to-date, MUFG has gained 20.33%, versus a -3.93% 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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