Concerns over the Fed’s tighter monetary policy to fight multi-decade high inflation, deepening supply chain issues, the ongoing Russia-Ukraine war, and the possibility of an economic slowdown have kept the equity markets volatile over the past few months. This is evident from the CBOE Volatility Index’s 39.3% gains year-to-date.
Amid the volatile environment, dividend growth stocks attract massive investor attention because of their solid histories of dividend growth and stable cash flows. Such companies are well-positioned to generate a regular source of income, even during high uncertainty, due to their solid fundamentals, healthy cash flows, and strong businesses due to relatively inelastic market demand. The investors’ interest in the dividend stocks is evident from iShares Core High Dividend ETF’s (HDV) 10% returns over the past year.
Thus, it could be profitable to invest in quality dividend growth stocks Pfizer Inc. (PFE), New Residential Investment Corp. (NRZ), Jabil Inc. (JBL), Huntsman Corporation (HUN), and FedEx Corporation (FDX), which are trading at discounts to their intrinsic values.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, and sells biopharmaceutical products worldwide. The company provides medicines and vaccines in various therapeutic areas, such as cardiovascular metabolic and women’s health; biologics, small molecules, immunotherapies, and biosimilars; and COVID-19. It serves wholesalers, retailers, hospitals, pharmacies, government agencies, and disease control and prevention centers.
On May 26, PFE announced that the U.S. Food and Drug Administration (FDA) had granted Fast Track designation for ervogastat and clesacostat combination to treat non-alcoholic steatohepatitis (NASH) with liver fibrosis.
On May 10, PFE and Biohaven Pharmaceutical Holding Company Ltd. (BHVN) entered into a definitive agreement to acquire Biohaven, the maker of NURTEC ODT, a dual-acting migraine therapy. Under the terms of the deal, PFE will acquire all outstanding shares of BHVN not already owned by PFE for $148.50 per share in cash. The company will also acquire BHVN’s calcitonin gene-related peptide programs.
In the fiscal 2022 first quarter ended March 31, 2022, PFE's revenues increased 76.8% year-over-year to $25.66 billion. Its income from continuing operations grew 61.3% year-over-year to $7.88 billion. The company's non-GAAP net income attributable to PFE common stockholders and non-GAAP earnings per common share attributable to PFE common shareholders came in at $9.34 billion and $1.62, registering an increase of 74.5% and 70.5% from the prior-year period, respectively.
PFE’s dividend payouts have grown at a CAGR of 6% over the past three years. Its current dividend translates to a 2.99% yield, while its four-year average dividend yield translates to 3.62%.
PFE’s revenue and EBITDA rose at CAGRs of 19.7% and 18.4%, respectively, over the past three years.
In terms of forward non-GAAP P/E, PFE is currently trading at 7.87x, 60.8% lower than the industry average of 20.07x.
The $26.26 billion consensus revenue estimate for the fiscal 2022 second quarter, ending June 2022, represents a 38.4% improvement from the same period last year. Analysts expect PFE’s EPS for the same quarter to increase 74.1% year-over-year to $1.86. The company has topped the consensus revenue in three of the trailing four quarters, and the EPS estimates in each of the trailing four quarters.
The stock has increased 8.1% over the past month and 37.6% over the past year to close yesterday’s trading session at $53.47.
PFE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, equating to a Strong Buy in our proprietary rating system.
PFE has a grade of B for Growth, Value, and Quality. Within the Medical-Pharmaceuticals industry, it is ranked #7 of 168 stocks. To see additional POWR Ratings (Stability, Sentiment, and Momentum) for PFE, click here.
New Residential Investment Corp. (NRZ)
NRZ provides capital and services to the mortgage and financial industry. The company operates through eight segments: Origination; Servicing; MSR Related Investments; Residential Securities; Properties and Loans; Consumer Loans; Mortgage Loans; and Corporate. It invests in mortgage servicing rights, residential mortgage-backed securities, properties and loans, consumer loans, and mortgage origination and servicing companies.
NRZ's revenues increased 47.7% year-over-year to $1.73 billion in the fiscal 2022 first quarter ended March 31, 2022. Its income before taxes rose 123.4% year-over-year to $892.72 million. In addition, the company’s core earnings and core earnings per common share came in at $177.40 million and $0.37, registering a rise of 22.5% and 8.8% year-over-year, respectively.
NRZ pays $1 as dividends annually, yielding 8.90% on the current price. Its 4-year average dividend yield translates to 11.45%.
NRZ’s revenue and net income improved at CAGRs of 46.6% and 32.1%, respectively, over the past three years.
In terms of forward non-GAAP P/E, NRZ is currently trading at 7.70x, 25.7% lower than the industry average of 10.37x.
The consensus revenue estimate of $1.12 billion for the fiscal 2022 second quarter, ending June 2022, represents an increase of 145.8% from the prior-year period. The $0.36 consensus EPS estimate for the current quarter indicates a 14.9% year-over-year rise. Furthermore, it has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 2.4% year-to-date and closed yesterday's trading session at $11.23.
NRZ's POWR Ratings reflect this strong outlook. It has an overall grade of B, equating to Buy in our proprietary rating system.
NRZ has a grade of B for Growth, Value, and Quality. Within the REITs - Mortgage industry, it is ranked #1 of 31 stocks. To see additional POWR Ratings (Sentiment, Momentum, and Stability) for NRZ, click here.
Jabil Inc. (JBL)
JBL is the provider of manufacturing services and solutions worldwide. The company operates in two segments: Electronics Manufacturing Services; and Diversified Manufacturing Services. It offers a range of electronic design, production, and product management services. Additionally, it offers product and process validation services. JBL serves 5G, wireless and cloud, digital print and retail, automotive and transportation, healthcare, and mobility industries.
On May 18, JBL launched the Qfinity autoinjector platform, a simple, reusable, and modular solution for subcutaneous (SC) drug self-administration with broad applicability. This is a competitively priced solution with a connected option for clinical trial development and commercial supply. This new launch is expected to boost the company’s revenue streams.
On May 17, JBL strengthened its additive manufacturing offerings with the new PK 5000, an eco-friendly, powder-based additive material engineered to deliver improved impact strength and greater chemical resistance compared to PA 12 and available polymer powders for SLS processes. This might accelerate the company’s profitability and growth.
In the fiscal 2022 second quarter ended February 28, 2022, JBL's net revenue grew 10.6% year-over-year to $7.55 billion, and its gross profit improved 7% from the year-ago value to $609 million. The company's core operating income rose 20.7% year-over-year to $344 million. Its core earnings and earnings per common share came in at $246 million and $1.68, up 26.8% and 32.3% year-over-year, respectively.
While its four-year average dividend yield is 0.89%, its current dividend translates to a 0.52% yield.
JBL’s revenue and net income grew at a CAGR of 8.9% and 66.1%, respectively, over the past three years.
In terms of forward EV/Sales, JBL is currently trading at 0.34x, 88.4% lower than the industry average of 2.96x.
Analysts expect JBL’s EPS to grow 24.5% year-over-year to $1.62 for its fiscal 2022 third quarter, ending May 2022. The $8.22 billion consensus revenue estimate for the ongoing quarter represents a 13.9% rise from the same period in 2021. The company has topped the consensus revenue estimates in three of the trailing four quarters, and the consensus EPS estimates in each of the trailing four quarters.
JBL’s shares have increased 7.5% over the past month and 7% over the past year and closed yesterday’s trading session at $61.70.
JBL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, equating to a Strong Buy in our proprietary rating system.
JBL has a B grade for Growth, Value, Quality, and Sentiment. Within the Technology-Services industry, it is ranked #6 of 81 stocks. To see additional POWR Ratings (Stability and Momentum) for JBL, click here.
Huntsman Corporation (HUN)
HUN manufactures and sells differentiated organic chemical products worldwide. The company operates through four segments: Polyurethanes; Performance Products; Advanced Materials; and Textile Effects. It offers polyurethane chemicals, amines and maleic anhydrides, high-performance thermoset resins, curing and toughening agents, and carbon nanotubes additives.
Yesterday, HUN entered a new $1.2 billion senior unsecured, sustainability-linked revolving credit facility maturing on May 20, 2027. “We take pride in the role we play in creating a more sustainable future. Linking our revolving credit facility to sustainability objectives supports our commitment to provide innovative solutions for a low-carbon and more sustainable economy,” said Phil Lister, Executive Vice President, and Chief Financial Officer.
HUN's revenues increased 30% year-over-year to $2.39 billion in the fiscal 2022 first quarter ended March 31, 2022. Its gross profit rose 44.1% year-over-year to $565 million. Its adjusted EBITDA grew 43.6% from the year-ago value to $415 million. In addition, the company’s adjusted net income and adjusted income per share came in at $256 million and $1.19, registering an increase of 74.1% and 80.3% year-over-year, respectively.
HUN’s dividend payouts have grown at a 6% CAGR over the last three years and a 9.2% CAGR over the past five years. Its four-year average dividend yield is 2.73%, and its current dividend translates to a 2.37% yield. The company is expected to pay a $0.21 per share quarterly dividend on June 30, 2022.
Over the past three years, its EBITDA and net income improved at CAGRs of 11.5% and 86.7%, respectively.
In terms of forward non-GAAP P/E, HUN is currently trading at 8.08x, 30.2% lower than the industry average of 11.58x.
The $2.32 billion consensus revenue estimate for the fiscal 2022 second quarter, ending June 2022, represents a 14.7% improvement from the same period last year. Analysts expect HUN’s EPS for the current quarter to increase 32.5% year-over-year to $1.14. The company has an impressive revenue and earnings history as it has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has improved 10.1% over the past six months and 27.3% over the past year to close yesterday’s trading session at $35.82.
HUN's POWR Ratings reflect a promising outlook. The stock has an overall grade of A, which equates to a Strong Buy in our proprietary rating system.
HUN has a grade of A for Value and B for Growth. Within the A-rated Chemicals industry, it is ranked #12 of 91 stocks. To see additional POWR Ratings (Momentum, Stability, Quality, and Sentiment) for HUN, click here.
FedEx Corporation (FDX)
FDX offers transportation, e-commerce, and business services in the U.S. and internationally. The company operates through five segments: FedEx Express; FedEx Ground; FedEx Freight; FedEx Services; and Corporate, Other, and Eliminations. It provides freight transportation services, e-commerce services, and business services, including sales, marketing, IT, customer service, and back-office function services.
In May, FDX and Aurora Innovation, Inc. (AUR) expanded the autonomous commercial linehaul trucking pilot in Texas. “Aurora has been a like-minded collaborator, helping us learn from and grow our autonomous trucking solutions. We look forward to our continued work together as we test further integration of autonomous technology into our operations to build a collaborative, robust network of solutions to respond to growing customer demand,” said Rebecca Yeung, FDX’s Corporate Vice President, Operations Science & Advanced Technology.
FDX's revenue grew 9.8% year-over-year to $23.60 billion in the fiscal 2022 third quarter ended February 28, 2022. The company's operating income rose 37.4% from the year-ago value to $1.46 billion. Its net income and earnings per share came in at $1.22 billion and $4.59, respectively, registering an increase of 29.6% and 32.3% from the prior-year period.
BDX pays $3 as dividends annually, yielding 1.38% on the current price. The company’s dividends have increased at a CAGR of 4.9% over the past three years and 13.4% over the past five years.
Its revenue and EBITDA improved at CAGRs of 9.8% and 10.6%, respectively, over the past three years.
In terms of forward EV/Sales, FDX is currently trading at 10.49x, 37.4% lower than the industry average of 16.76x.
Analysts expect FDX's revenue for the fiscal 2022 fourth quarter ended May 2022 to come in at $24.55 billion, representing an 8.6% rise year-over-year. Street expects the company's EPS for the to-be-reported quarter to come in at $6.87, representing a growth of 37% year-over-year. The company has surpassed the consensus revenue estimates in each of the trailing four quarters.
FDX’s shares have gained 5.2% over the past month and closed yesterday's trading session at $217.17.
FDX's POWR Ratings reflect a strong outlook. The stock has an overall rating of B, which translates to Buy in our POWR Ratings system.
FDX has a B grade for Stability, Value, Quality, and Growth. It is ranked #4 of 17 stocks in the A-rated Air Freight & Shipping Services industry. Click here to see FDX's POWR Ratings for Sentiment and Momentum.
PFE shares were trading at $50.45 per share on Friday afternoon, down $1.33 (-2.57%). Year-to-date, PFE has declined -13.21%, versus a -17.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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