Amid the Federal Reserve’s efforts to cool off a red-hot employment market, the Labor Department reported that job openings dipped in October. The Job Openings and Labor Turnover Survey showed a decline of 353,000 from September and down 760,000 compared with a year ago.
As per the Commerce Department, the core Personal Consumption Expenditures index rose 0.2% in October month over month, while the index rose 5% year over year in October compared with 5.2% in September. This a sign that price increases might be stabilizing.
Moreover, in a speech on Wednesday, Federal Reserve Chairman Jerome Powell confirmed that smaller interest rate increases are likely ahead. However, he added that he needs to see more consistent evidence before the central bank can change gears on policy.
Given this volatile backdrop, fundamentally strong stocks Johnson & Johnson (JNJ), CVS Health Corporation (CVS), Douglas Dynamics, Inc. (PLOW), and Genie Energy Ltd. (GNE), which have a solid dividend-paying history, could be appropriate choices to fire up your portfolio this winter.
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 November 1, JNJ announced that it had entered into a definitive agreement with Abiomed, Inc. (ABMD) to acquire all outstanding ABMD shares through a tender offer for an enterprise value of approximately $16.60 billion. The agreement is expected to broaden JNJ’s MedTech segment’s position as a cardiovascular innovator.
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."
On October 19, JNJ announced its cash dividend of $1.13 per share for the fourth quarter of 2022, payable on December 6, 2022. The company pays $4.52 per share annually, which translates to a yield of 2.53% at the current price.
It has a four-year average yield of 2.60%. Additionally, with a consecutive 60 years of dividend growth, the company’s dividend payouts have increased at a 5.9% CAGR over the past three years and a 6% CAGR over the past five years.
JNJ’s gross profit increased 1.8% year-over-year to $47.91 billion in the fiscal third quarter that ended September 30. Its sales to customers grew 3.3% from the year-ago value to $71.24 billion, while its net earnings improved 21.6% year-over-year to $4.46 billion. The company’s net earnings per common share rose 22.6% from its year-ago value to $1.68.
The consensus EPS estimate of $10.05 for the current fiscal year (ending December 2022) indicates a 2.5% improvement year-over-year. Revenue is expected to increase 1.3% year-over-year to $95.04 billion for the current year. Additionally, JNJ has topped its consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 13.1% over the past year to close its last trading session at $178.74.
JNJ’s POWR Ratings reflect this promising outlook. 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.
JNJ is rated an A in Stability and a B in Sentiment, Value, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #3 out of 161 stocks.
Beyond what we’ve stated above, we have also given grades for Momentum and Growth for JNJ. Get all JNJ ratings here.
CVS Health Corporation (CVS)
CVS provides health services in the United States. It operates through three segments: Health Care Benefits, Pharmacy Services, and Retail/LTC.
On December 1, CVS announced it had opened its first MinuteClinic, the medical clinic inside selected CVS Pharmacy stores that provides high-quality, affordable, and convenient care for patients with a wide variety of acute and chronic conditions in northern Delaware. This is expected to expand the customer base of the company.
On November 1, CVS paid its quarterly dividend of $0.55 per share. Its annual dividend of $2.20 per share translates to a 2.16% yield on the current price. Over the last three years, CVS’ dividend payouts have grown at a 3.2% CAGR. Its four-year average dividend yield is 2.78%.
For the fiscal third quarter ended September 30, CVS’ total revenues increased 10% year-over-year to $81.16 billion. Its adjusted operating income increased 3.9% year-over-year to $4.23 billion. The company’s adjusted income increased 5.3% year-over-year to $2.76 billion. Moreover, its adjusted EPS came in at $2.09, representing an increase of 6.1% from the prior-year quarter.
Analysts expect CVS’ EPS for the current fiscal year ending December 2022 to increase 2.6% year-over-year to $8.62. Its revenue for the current year is expected to increase 7.6% year-over-year to $314.35 billion.
It has an impressive earnings and revenue surprise history, surpassing the consensus EPS and revenue estimates in each of the trailing four quarters.
The stock has gained 14.5% over the past year to close its last trading session at $101.65.
CVS’ strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B for Stability and Sentiment. The stock is ranked first out of four stocks in the B-rated Medical – Drug Stores industry. Get all CVS ratings here.
Douglas Dynamics, Inc. (PLOW)
PLOW is a manufacturer and upfitter of commercial work truck attachments and equipment in North America. It operates through two segments: Work Truck Attachments and Work Truck Solutions. It distributes its products primarily to professional snow plowers.
On September 6, PLOW declared a quarterly cash dividend of $0.29 per share for the third quarter of 2022, which was payable on September 30, 2022.
Its annual dividend of $1.16 yields 2.97% on prevailing prices. The company’s dividend payouts have increased at a 2.2% CAGR over the past three years and a 3.9% CAGR over the past five years. The company has a record of 11 years of consecutive dividend growth.
For the fiscal third quarter ended September 30, PLOW’s net sales increased 30.1% year-over-year to $166.10 million. Adjusted EBITDA rose 62.2% from its prior-year quarter to $25.13 million. The company’s adjusted net earnings and adjusted net earnings per share came in at $13.49 million and $0.57, up 94.1% and 96.6% from the prior-year quarter.
PLOW’s EPS is estimated to rise 17.5% year-over-year to $0.49 in the fiscal fourth quarter (ending December 2022). Likewise, its revenue estimate for the same quarter of $165.23 million indicates an 8% improvement from the prior-year quarter. Additionally, PLOW has topped consensus EPS estimates in three of the trailing four quarters.
Over the past three months, PLOW’s stock has gained 33% to close its last trading session at $39.02.
This promising prospect is reflected in PLOW’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
PLOW has a B grade for Growth, Sentiment, and Quality. It is ranked #30 out of the 63 stocks in the B-rated Auto Parts industry.
Click here to see the additional POWR Ratings for PLOW (Value, Momentum, and Stability).
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. It operates in three segments, Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On September 20, GNE announced that it currently owns site rights to solar generation projects with an aggregate of 64 MW in New York and Pennsylvania. The company stands to benefit through the incentives from the Inflation Reduction Act targeted at solar power generation in the earlier stages.
On August 8, GNE’s Board of Directors declared a dividend of $0.075 per share of Class A and Class B common stock, which was payable on or about August 26. Its annual dividend of $0.30 yields 3.30% on prevailing prices.
Net income attributable to GNE common stockholders increased 777.8% year-over-year to $18.31 million. Its adjusted EBITDA increased 35.4% year-over-year to $24.50 million. The company’s EPS rose 800% from the prior-year quarter to $0.70.
Over the past year, GNE’s stock has gained 93.7% to close its last trading session at $9.88. It has gained 77.4% year-to-date.
It is no surprise that the stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
GNE also has an A grade for Value and a B for Momentum, Sentiment, and Growth. It is ranked #1 of 66 stocks in the Utilities - Domestic industry.
In addition to the POWR Rating grades highlighted, you can see the GNE ratings for Quality and Stability here.
JNJ shares were trading at $177.91 per share on Friday morning, down $0.83 (-0.46%). Year-to-date, JNJ has gained 6.73%, versus a -13.62% 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.
4 Stocks That Can Help Fire up Your Portfolio This Winter StockNews.com
