The major market indexes have experienced extreme volatility since the beginning of the year, with the DJIA slipping 3.3% in January, and the S&P 500 and Nasdaq retreating 5.3% and 8.9%, respectively, marking their worst monthly performance since March 2020. The volatility has been driven by geopolitical tensions between the U.S. and Russia over Ukraine and the Fed’s decision to increase interest rates multiple times this year to control multi-decade high inflation.
The Labor Department recently has released consumer price index data for January, with inflation rising 7.5% year-on-year, exceeding Dow Jones’ 7.2% estimate and marking the highest inflation level since February 1982. This could foster further stock market volatility in the near term, raising the likelihood of an aggressive interest rate hike in March.
Dividend investing is a strategy for generating consistent income during periods of market volatility. It is even better to invest in shares of companies that have an impressive history of dividend growth. Dividend growth implies that a company is constantly expanding its revenues, profits, and cash flows. Such stocks provide growing income and usually witness price appreciation because of their improving financials. So, given the current market volatility, we think it could be wise to add quality dividend growth stocks Microsoft Corporation (MSFT), Eli Lilly and Company (LLY), Zoetis Inc. (ZTS), and The TJX Companies Inc. (TJX) to one’s watchlist.
Microsoft Corporation (MSFT)
Famous technology company MSFT, in Redmond, Wash., develops and supports a range of software products, services, devices, and solutions. The company operates in the Productivity and Business Processes; Intelligent Cloud; and Personal Computing segments.
On Jan.18, 2022, MSFT announced that it would buy gaming giant Activision Blizzard, Inc. (ATVI) in an all-cash deal worth $68.70 billion. This deal should help MSFT realize its vision of building technologies to create a metaverse. The acquisition also makes MSFT the third largest gaming company in terms of revenue.
MSFT’s dividend payouts have grown at a 10.1% CAGR over the last three years. Its four-year average dividend yield is 1.2%, and its current dividend translates to a 0.8% yield. The company is expected to pay a $0.62 per share quarterly dividend on March 10, 2022.
MSFT’s revenue increased 20% year-over-year to $51.72 billion for the second quarter, ended Dec. 31, 2021. The company’s operating income increased 24% year-over-year to $22.24 billion. Also, its net income increased 21% year-over-year to $18.76 billion, while its EPS came in at $2.48, compared to $2.03 in the year-ago period.
Analysts expect MSFT’s EPS and revenue for its fiscal 2022 to increase 16.1% and 18.4%, respectively, year-over-year to $9.35 and $199.05 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 24.5% in price to close the last trading session at $302.38.
MSFT’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Sentiment and a B grade for Stability and Quality. It is ranked #19 of 165 stocks in the Software – Application industry. Click here to check MSFT ratings for Growth, Value, and Momentum.
Click here to check out our Software Industry Report for 2022
Eli Lilly and Company (LLY)
LLY is an Indianapolis, Ind.-based drug manufacturing company. It is engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. Its subsidiaries include Acanthas Pharma, Inc., Alnara Pharmaceuticals, Inc., ARMO Biosciences, Inc., and Avid Radiopharmaceuticals, Inc.
On Feb.10, 2022, LLY agreed with the U.S. government to supply up to 600,000 doses of its developmental COVID-19 antibody drug, bebtelovimab, which treats mild to moderate COVID-19 in some high-risk patients. It has also filed a request for the authorization of the drug with the U.S. FDA.
LLY’s dividend payouts have grown at a 14.7% CAGR over the last three years. While its four-year average dividend yield is 1.9%, its current dividend translates to a 1.6% yield.
For its fiscal fourth quarter, ended Dec. 31, 2021, LLY’s revenue increased 7.5% year-over-year to $7.99 billion. The company’s non-GAAP net income increased 7.5% year-over-year to $2.26 billion. Also, its non-GAAP EPS came in at $2.49, representing a 7.7% increase year-over-year.
For its fiscal 2023, LLY’s EPS and revenue are expected to increase 15.1% and 9.1%, respectively, year-over-year to $8.62 and $26.72 billion. Over the past nine months, the stock has gained 23% in price to close the last trading session at $239.64.
LLY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has a B grade for Growth, Stability, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #14 of 182 stocks. To see the other ratings of LLY for Value, Momentum, and Sentiment, click here.
Click here to checkout our Healthcare Sector Report for 2022
Zoetis Inc. (ZTS)
ZTS discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products. The Parsippany, N.J. company offers vaccines pharmaceutical products that comprise pain and sedation, antiemetic, reproductive, oncology products, and dermatology products.
On Dec. 7, 2021, ZTS announced that its board of directors had approved a $3.5 billion share repurchase program over a multi-year period as part of its capital allocation plans. Executive VP and CFO Wetteny Joseph said, “Our financial performance has remained solid this year and allows us to continue making meaningful investments in our business while returning capital to our shareholders.”
ZTS’ dividend payouts have grown at a 25.6% CAGR over the last three years. Its four-year average dividend yield is 0.5%, and its current dividend translates to a 0.6% yield. The company is expected to pay a quarterly dividend of $0.325 per share on June 1, 2022.
ZTS’ revenue increased 11.4% year-over-year to $1.99 billion. Its adjusted net income increased 13.9% year-over-year to $597 million. Also, its adjusted EPS came in at $1.25, representing a 13.6% increase year-over-year.
Analysts expect ZTS’ EPS and revenue for its fiscal year 2021 are expected to increase 21.3% and 16%, respectively, year-over-year to $4.67 and $7.74 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 24.1% in price to close the last trading session at $199.37.
ZTS’ POWR Ratings reflect solid prospects. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth, Stability, and Sentiment. It is ranked #9 in the Medical – Pharmaceuticals industry. Click here to see the ratings of ZTS for Value and Momentum.
Click here to checkout our Healthcare Sector Report for 2022
The TJX Companies, Inc. (TJX)
TJX is an off-price and home fashions retailer. The Framingham. Nass-based concern operates in four segments: Marmaxx; HomeGoods; TJX Canada; and TJX International. It sells family apparel, fine jewelry, accessories, home fashions like home basics, furniture, rugs, lighting products, and tabletop.
TJX’s dividend payouts have grown at a 10% CAGR over the last three years. Its four-year average dividend yield is 1.2%, and its current dividend translates to a 1.4% yield.
TJX’s net sales for its fiscal third quarter, ended Oct. 30, 2021, increased 20% year-over-year to $12.53 billion. The company’s net income increased 18% year-over-year to $1.02 billion. And its EPS increased 18.3% year-over-year to $0.84.
TJX’s EPS and revenue for its fiscal year 2022 are expected to increase 861.3% and 51.9%, respectively, year-over-year to $2.98 and $48.82, respectively. It has surpassed consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 3% in price to close the last trading session at $70.64.
TJX’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Growth and Quality. Within the A-rated Fashion & Luxury industry, it is ranked #21 of 65 stocks. To see the other ratings of TJX for Value, Momentum, and Stability, click here.
What To Do Next?
If you would like to see more top growth stocks, then you should check out our free special report:
What makes them "MUST OWN"?
All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.
Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +31.10% a year.
Click below now to see these top performing stocks with exciting growth prospects:
MSFT shares were trading at $302.97 per share on Friday morning, up $0.59 (+0.20%). Year-to-date, MSFT has declined -9.92%, versus a -5.07% 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.
4 Top Dividend Growth Stocks to Add to Your Watchlist StockNews.com
