Pessimism concerning the broader markets is above its historical average of 30.5% for the 45th time out of the past 46 weeks, according to the latest American Association of Individual Investors (AAII) Sentiment survey. Amid the Fed’s consecutive rate hikes, the S&P 500 lost 24.7% year-to-date. While JPMorgan’s chief executive believes the S&P 500 could decline by another 20%, Tobias Adrian, director of monetary and capital markets at the International Monetary Fund, said it is “certainly possible.”
Adrian also warned of significantly high financial stability risks, and the global economy is in a “very, very stressed moment.” Moreover, non-farm payrolls increased by 263,000 jobs in September 2022, and tight labor market conditions are prompting the Fed to continue its hawkish rate hikes.
We think fundamentally sound stocks UnitedHealth Group Incorporated (UNH), Walmart Inc. (WMT), AbbVie Inc. (ABBV), The Coca-Cola Company (KO), and Dollar General Corporation (DG), which have a significant dividend-paying history, could help navigate a potential bear market.
UnitedHealth Group Incorporated (UNH)
UNH operates as a diversified healthcare company in the United States. It operates through four segments: UnitedHealthcare; OptumHealth; OptumInsight; and OptumRx.
On October 1, 2022, UNH introduced its 2023 Medicare Advantage and prescription drug plans, which include advanced ancillary benefits, reduced prescription drug costs, and further enhancements to core benefits. This plan might expand the company’s consumer base.
UNH has paid dividends for 19 consecutive years. Over the last three years, UNH’s dividend payouts have grown at a 16.1% CAGR. While UNH’s four-year average dividend yield is 1.36%, its current dividend translates to a 1.32% yield.
UNH’s total revenues increased 12.6% year-over-year to $80.33 billion in the second quarter that ended June 30, 2022. Its adjusted net earnings came in at $5.29 billion, up 17.7% year-over-year, while its adjusted EPS came in at $5.57, up 18.5% year-over-year.
Analysts expect UNH’s revenue to increase 12% year-over-year to $322.15 billion in 2022. Its EPS is estimated to grow 15% year-over-year to $21.87 in 2022. In addition, it has surpassed the consensus EPS estimates in all four trailing quarters. Over the past nine months, the stock has gained 6.6% to close the last trading session at $499.81.
UNH’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Sentiment and a B grade for Growth, Stability, and Quality. Within the A-rated Medical – Health Insurance industry, it is ranked #2 out of 11 stocks. Click here for the additional POWR Ratings for Value and Momentum for UNH.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On September 26, 2022, WMT announced the launch of two new experiences in the metaverse mega-platform, Roblox. WMT aims to offer its customers an exciting virtual experience by entering the metaverse bandwagon.
Also, on September 22, 2022, WMT, The Procter & Gamble Company (PG), and international recycling leader TerraCycle announced their free in-store recycling collection for empty hair care and skincare cosmetic packaging. This is a remarkable effort toward sustainable growth.
WMT has paid dividends for 48 consecutive years. Over the last three years, WMT’s dividend payouts have grown at a marginal CAGR. While WMT’s four-year average dividend yield is 1.73%, its current dividend translates to a 1.69% yield.
WMT’s total revenues came in at $152.86 billion for the second quarter that ended July 31, 2022, up 8.4% year-over-year. Its consolidated net income came in at $5.15 billion, up 17.9% year-over-year, while its EPS came in at $1.88, up 23.7% year-over-year.
Street expects WMT’s revenue to increase by 4.8% year-over-year to $600.06 billion in 2023. Its EPS is expected to grow 6% per annum for the next five years. It surpassed EPS estimates in three of four trailing quarters. Over the past three months, the stock has gained 5.8% to close the last trading session at $132.67.
WMT has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #6 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Click here to see the additional ratings for WMT (Value and Momentum).
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company works across several key therapeutic areas like immunology, oncology, neuroscience, eye care, virology, and gastroenterology.
On August 2, 2022, ABBV and Sosei Group Corporation signed a new drug discovery collaboration, under which the companies will conduct extensive research in neurological diseases. This collaboration could be a game changer in medical sciences.
ABBV has paid dividends for eight consecutive years. Over the last three years, ABBV’s dividend payouts have grown at a 9.9% CAGR. While ABBV’s four-year average dividend yield is 4.65%, its current dividend translates to a 3.99% yield.
ABBV’s net revenues came in at $14.58 billion for the second quarter that ended June 30, 2022, up 4.5% year-over-year. Its adjusted earnings after tax came in at $6.01 billion, up 10.7% year-over-year, while its adjusted EPS came in at $3.37, up 11.2% year-over-year.
ABBV’s revenue is expected to reach $58.95 billion in 2022, representing a 5% year-over-year rise. The company’s EPS is expected to increase 17.2% year-over-year to $13.87 in 2022. The stock has gained 28.3% over the past year to close the last trading session at $141.51.
It’s no surprise that ABBV has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B grade for Growth and Value.
ABBV is ranked #8 out of 164 stocks in the Medical – Pharmaceuticals industry. Click here to see the additional POWR Ratings for ABBV (Momentum, Stability, and Sentiment).
The Coca-Cola Company (KO)
Beverage company KO manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy and plant-based beverages, tea and coffee, and energy drinks.
On September 29, 2022, KO and Molson Coors Beverage Company (TAP) expanded their exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails.
Dan White, Chief of New Revenue Streams, KO’s North America Operating Unit, said, “We are excited to see Molson Coors bring Topo Chico Spirited to store shelves next year.”
KO has paid dividends for 59 consecutive years. Over the last three years, KO’s dividend payouts have grown at a 3.1% CAGR. While KO’s four-year average dividend yield is 3.09%, its current dividend translates to a 3.23% yield.
KO’s net operating revenues for the second quarter ended July 1, 2022, came in at $11.32 billion, up 11.8% year-over-year. Its non-GAAP operating income came in at $3.46 billion, up 8% year-over-year. The company’s non-GAAP net income came in at $3.06 billion, up 4.4% year-over-year.
KO’s revenue is expected to increase 8.9% year-over-year to $42.10 billion in 2022. Its EPS is estimated to grow 6% year-over-year to $2.46 in 2022. It surpassed EPS estimates in all four trailing quarters. KO’s shares have gained marginally intraday to close the last trading session at $54.48.
KO’s overall B rating equates to a Buy in our proprietary rating system. In addition, it has a B grade for Stability, Sentiment, and Quality.
KO is ranked #18 out of 35 stocks in the A-rated Beverages industry. In addition, we’ve also rated the stock for Growth, Value, and Momentum. Click here to get all the KO ratings.
Dollar General Corporation (DG)
Discount retailer DG provides various merchandise products in the southern, southwestern, Midwestern, and eastern United States. The company operated 18,566 stores in 47 states as of July 29, 2022.
On August 25, 2022, Todd Vasos, DG’s CEO, said, “Looking ahead, we are confident that our strategic actions, which have transformed this company in recent years and solidified Dollar General as the clear leader in small-box discount retail, have positioned us well for continued success while supporting long-term shareholder value creation.”
DG has paid dividends for seven consecutive years. Over the last three years, DG’s dividend payouts have grown at an 18.3% CAGR. While DG’s four-year average dividend yield is 0.80%, its current dividend translates to a 0.92% yield.
DG’s net sales came in at $9.43 billion for the second quarter that ended July 29, 2022, up 9% year-over-year. Its net income came in at $678.03 million, up 6.4% year-over-year. Moreover, its EPS came in at $2.98, up 10.8% year-over-year.
DG’s revenue is expected to increase 10.7% year-over-year to $37.89 billion in 2023. Its EPS is expected to increase by 13.8% year-over-year to $11.57 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 14.2% to close the last trading session at $239.63.
DG’s overall B rating equates to a Buy in our POWR Ratings system. It has a B grade for Stability. It is ranked #28 in the Grocery/Big Box Retailers industry. Click here to see the additional POWR Ratings for DG (Growth, Value, Momentum, Sentiment, and Quality).
UNH shares were trading at $502.92 per share on Wednesday afternoon, up $3.11 (+0.62%). Year-to-date, UNH has gained 1.13%, versus a -23.71% 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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