Galloping inflation, supply chain disruptions, the resurgence of COVID-19 cases, and escalating geopolitical tensions have fostered significant market volatility. The stock market rose in the last trading session, breaking a long streak of weekly declines, the Dow added 516.91 points, while the S&P 500 climbed about 2% to 4,057.84, and the Nasdaq Composite advanced nearly 2.7% to 11,740.65. However, analysts believe this relief rally will be short-lived and does not indicate a change in the overall trend.
Goldman Sachs calculates the odds of a recession at 35% over the next two years. Amid the heightened market volatility, investing in quality dividend stocks could hedge one’s portfolio and ensure a stable stream of returns. Investors’ interest in dividend stocks is evident in the SPDR S&P Dividend ETF’s (SDY) 0.5% returns over the past three months versus the broader SPDR S&P 500 Trust ETF’s (SPY) 7.4% slump.
Thus, we think investing in dividend kings W.W. Grainger, Inc. (GWW), Tennant Company (TNC), The Coca-Cola Company (KO), Parker-Hannifin Corporation (PH), and Emerson Electric Co. (EMR), which have solid consecutive dividend growth records, could be ideal bets now.
W.W. Grainger, Inc. (GWW)
GWW in Lake Forest, Ill., is a B2B distributor of maintenance, repair, and operating (MRO) products and services. Its product offering includes safety and security, material handling and storage, pumps and plumbing equipment, cleaning, and maintenance, metalworking, and hand tools. The company operates through two segments: High-Touch Solutions N.A; and Endless Assortment.
On April 27, GWW’s board of directors declared a 6% increase in the company’s quarterly cash dividend to $1.72 per share, payable on June 1, 2022. This reflects the company’s improved performance. GWW pays $6.88 as dividends annually, yielding 1.47% on its current share price. GWW has a record of 50 consecutive years of dividend growth.
In its fiscal first quarter (ended March 31, 2022), GWW’s sales increased 18% year-over-year to $3.65 billion. Its gross profit increased 27% from the year-ago value to $1.38 billion, while its net earnings grew 54% year-over-year to $366 million. The company’s EPS came in at $7.07, representing a 58% year-over-year improvement.
For its fiscal second quarter (ending June 2022), GWW’s EPS and revenue are expected to increase 53.2% and 14.6%, respectively, year-over-year to $6.54 and $3.68 billion. The stock has surpassed the consensus EPS estimate in three of the trailing four quarters.
The shares of GWW have gained marginally over the past year to close the last trading session at $477.73.
GWW’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
GWW also has an A grade for Quality and a B grade for Growth, Momentum, Stability, and Sentiment. Within the Industrial - Equipment industry, it is ranked #9 of 94 stocks. Click here to see the Value ratings of GWW.
Click here to check out our Industrial Sector Report for 2022
Tennant Company (TNC)
TNC in Minneapolis, Minn., designs, manufactures, and markets floor cleaning equipment in America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers its products under eight brands: Tennant, Nobles, Alfa Uma Empresa Tennant, IRIS, VLX, IPC, Gaomei, and Rongen brands, as well as private-label brands.
On April 26, TNC declared a quarterly dividend of $0.25 per share on the common stock, payable on June 15, 2022. TNC pays $1 as dividends annually, yielding 1.64% on the current price.
On April 6, the company introduced lithium-ion technology to its portfolio of AMR machines with newly added benefits for customers in the cleaning industry. Such as hassle-free and innovative introductions should enhance consumer demand while increasing its revenues.
On January 26, TNC launched its first multi-use robotic solution ‘Inventory Scan’ for retailers, developed in partnership with Brain Corp. The company expects to deliver improved inventory analytics and allows retailers to be more efficient.
TNC’s $10.30 million in net income on net sales of $258.10 million represents 0.8% organic sales growth in its fiscal first quarter (ended March 31, 2022). Its net sales from the Americas grew 1.6% from the year-ago value to $160.30 million.
The $302.80 million consensus revenue estimate for its fiscal third quarter (ending Sept. 30, 2022) represents an 11.3% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
TNC stock has gained marginally in price over the past five days.
TNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. TNC also has a B grade for Value, Stability, and Quality. The stock is ranked #7 of 81 stocks in the B-rated Industrial – Machinery industry. Click here to see the additional ratings of TNC for Growth, Momentum, and Sentiment.
Click here to check out our Industrial Sector Report for 2022
The Coca-Cola Company (KO)
KO is an Atlanta, Ga.-based beverage company that manufactures, markets, and sells various nonalcoholic beverages globally. It sells its products under brands: Coca-Cola, Sprite, Fanta, Diet Coke, Coca-Cola Zero Sugar, Thumbs Up, Aquarius, fairlife, Minute Maid Pulpy, Simply, among various others.
On April 27, KO increased its quarterly dividend by 6% to $0.44 per common share, payable on July 1, 2022. The company pays $1.76 as dividends annually, yielding 2.75% on its current share price. KO has a record of 59 consecutive years of dividend growth.
During its fiscal year 2022 first quarter (ended April 1, 2022), KO’s net revenues increased 16% year-over-year to $10.49 billion. Its gross profit rose 16% from its year-ago value to $6.40 billion. Its net income grew 24% from the same period last year to $2.78 billion, while its EPS came in at $0.64, representing a 23% increase year-over-year.
Analysts expect KO’s EPS and revenue to increase 2.5% and 7.3%, respectively, year-over-year to $0.67 and $10.78 billion in its fiscal third quarter (ending Sept. 30, 2022). It surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 19.7% in price over the past six months to close the last trading session at $64.30.
KO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. KO also has a B grade for Stability, Sentiment, and Quality. The stock is ranked #15 of 35 stocks in the A-rated Beverages industry. Click here to see the other KO ratings for Growth, Value, and Momentum.
Parker-Hannifin Corporation (PH)
PH is a manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a range of mobile, industrial, and aerospace markets. It operates through two segments: Diversified Industrial and Aerospace Systems. The company is headquartered in Mayfield Heights, Ohio.
PH expects to meet its five-year transformation target by implementing Win Strategy 3.0 across its operations. This is expected to increase its organic sales and enable strong margin expansion and continued EPS growth in the next five-year term.
On April 28, PH’s board of directors declared a 29% increase in the company’s quarterly cash dividend to $1.33 per share, payable on June 3, 2022. This reflects the company’s strong financials. PH pays $5.32 as dividends annually, yielding 2.03% on the current price. The company has a record of 65 consecutive years of dividend growth.
In the fiscal third quarter (ended March 31, 2022), PH’s net sales increased 9% year-over-year to $4.09 billion. Its adjusted net income increased 16.3% from its year-ago value to $630.17 million, while its adjusted EPS came in at $4.83, representing a 17.2% year-over-year improvement.
For its fiscal fourth quarter (ending June 30, 2022), PH’s EPS and revenue are expected to increase 7.63% and 3.17%, respectively, year-over-year to $4.71 and $4.08 billion. It is no surprise that the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past five days, the stock has gained marginally in price , closing yesterday’s trading session at $268.01.
The company has an overall B rating, which translates to Buy in our proprietary rating system. PH has a B grade for Stability and Quality. The stock is ranked #25 of 94 stocks in the Industrial - Equipment industry. Click here to see the other ratings of PH for Growth, Value, Momentum, and Sentiment.
Emerson Electric Co. (EMR)
EMR in Ferguson, Mo., is a global technology and engineering company that provides innovative solutions for customers in industrial, commercial, and residential markets. It operates through two segments: Automation Solutions; and Commercial & Residential Solutions.
On April 5, the company launched its new GO real-time 4G/5G global trackers cold chain featuring ultra-low temp, more sensors, and up to 90 days of monitoring. Amid the growing IoT technologies market, such introductions could benefit the company’s customer base significantly.
On May 13, EMR declared a quarterly dividend of $0.52 per share of common stock, payable on June 10, 2022. The company pays $2.06 as dividends annually, yielding 2.45% on its current share price. EMR has a record of 64 consecutive years of dividend growth.
EMR’s net sales increased 8% year-over-year to $4.79 billion in the second quarter, ended March 31, 2021. Its net earnings increased 20% from the year-ago value to $674 million, while its EBIT grew 10% year-over-year to $811 million. EMR’s EPS rose 22% from the prior-year quarter to $1.13.
The $1.29 consensus EPS estimate for its fiscal third quarter (ending June 30, 2022) represents an 18.21% improvement year-over-year. The $5.09 billion consensus revenue estimate for the current quarter represents an 8.4% increase from the same period last year. The stock has surpassed the consensus EPS estimates in each of the trailing four quarters.
EMR’s shares rose marginally in price intra-day to close yesterday’s trading session at $86.60.
EMR has an overall B rating, which translates to Buy in our proprietary rating system. It is no surprise that EMR has a B grade for Stability, Sentiment, and Quality. Also, it is ranked #20 of 94 stocks in the Industrial - Equipment industry.`
In addition to the POWR Ratings grades I have just highlighted, one can see the EMR ratings for Growth, Value, and Momentum here.
GWW shares were trading at $486.42 per share on Friday morning, up $8.99 (+1.88%). Year-to-date, GWW has declined -5.48%, versus a -13.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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