The stock market ended on a positive note last month, with the major benchmark indexes recording their best month since 2020. Investors’ optimism over better-than-expected corporate earnings and the Fed’s indication of a less aggressive policy tightening depending on economic data primarily drive the recovery.
Chairman Jerome Powell said, “As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.”
However, the market struggled to sustain July’s momentum, with the major benchmark indexes slipping marginally to end the first session of August. Weak economic data led to recession concerns dominating investor sentiment.
Since the market’s volatility is not expected to lessen anytime soon, investing in dividend-paying stocks could help cushion one’s portfolio through a steady income stream.
Thus, we think it could be wise to invest in quality dividend-paying stocks ICL Group Ltd (ICL), Genie Energy Ltd. (GNE), Friedman Industries, Incorporated (FRD), United Microelectronics Corporation (UMC), and LSI Industries Inc. (LYTS), which are currently trading at around $10.
ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL and its subsidiaries are engaged in the fertilizer and specialty chemical sectors. The company operates in three segments: Fertilizers, Industrial Products, and Performance Products, and executes its sale through marketing companies, agents, and distributors.
On July 19, 2022, ICL and PlantArcBio Ltd, an ag-biotech company, announced the development of a novel bio-stimulant technology platform, which is expected to improve crop yields while having a minimal impact on the environment.
The vice president of External Innovation and general manager of ICL Planet, Hadar Sutovsky, said, “The use of novel biostimulants based on RNAi technology helps promote sustainability by reducing the use of chemicals in agriculture. This aligns perfectly with ICL's long-term goal of creating impact and sustainable growth in the agriculture end-market, alongside ensuring food security."
The company’s four-year average dividend yield is 3.35%, and its forward annual dividend of $1.17 translates to a 12.35% yield. Its dividend has grown at a 36.4% CAGR over the past three years and 81.1% CAGR over the past five years.
ICL’s net sales increased 78.1% year-over-year to $2.88 billion in the second quarter ended June 30, 2022. Its operating income grew 368.7% from the year-ago value to $1.14 billion, while its adjusted net income improved 456.3% year-over-year to $751 million. The company’s adjusted EBITDA came in at $1.26 billion, up 249.4% year-over-year. Also, its EPS increased 300% from its year-ago value to $0.44.
The consensus EPS estimate of $0.46 for the third quarter ending September 30, 2022, represents a 178.2% improvement year-over-year. The consensus revenue estimate of $2.66 billion for the current quarter indicates a 48.6% increase from the same period last year. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 29.4% to close the last trading session at $9.45.
ICL’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Growth and a B for Value, Sentiment, and Quality. Within the Agriculture industry, it is ranked first out of 33 stocks. Click here to see the other ratings of ICL for Momentum and Stability.
Genie Energy Ltd. (GNE)
GNE and its subsidiaries supply electricity and natural gas to residential and small business customers internationally. It has three operational segments: Genie Retail Energy (GRE), GRE International, and Genie Renewables.
On July 25, 2022, Genie Renewables, a division of GNE, announced the launch of Sunlight Energy, an investment vehicle structured to generate stable, predictable returns for participants through ownership of both Genie Renewables-originated solar generation projects and projects developed by third parties.
Nir Ashpiz, chief executive officer of Sunlight Energy, said, “Sunlight Energy will seek to structure project participation to provide investors with attractive and stable cash-flows while diversifying project-based risks. Our strong financial position will enable us to invest in promising projects, including early-stage opportunities developed independently of Genie.”
GNE’s four-year average dividend yield is 3.23%, and its current dividend translates to a 3% yield. The company paid a dividend of $0.08 per share on May 31, 2022.
For the fiscal first quarter ended March 31, 2022, GNE’s gross profit increased 259.9% year-over-year to $45.54 million. The company’s income from operations improved 547.1% year-over-year to $24.43 million. Also, its net income increased 843.6% year-over-year to $17.52 million. In addition, its EPS increased 844.4% year-over-year to $0.67.
GNE has gained 105.1% over the past nine months to close the last trading session at $10.11.
GNE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. Within the Utilities - Domestic industry, it is ranked first out of 67 stocks. To see GNE’s rating for Stability, click here.
Friedman Industries, Incorporated (FRD)
FRD is a manufacturer and processor of steel products with operating plants in Hickman, Arkansas; Decatur, Alabama and Lone Star, Texas. The company operates in two segments: coil products and tubular products.
On May 2, 2022, FRD acquired Plateplus, Inc.’s operations. With this acquisition, the company has expanded its operations geographically and is expected to serve a more extensive customer base.
FRD’s four-year average dividend yield is 1.57%, and its forward annual dividend translates to a 0.79% yield. Its dividend has grown at a 14.9% CAGR over the past five years. On June 28, 2022, the company announced a cash dividend of $0.02 per share on the common stock, payable on August 12, 2022.
FRD’s net sales increased 126.2% year-over-year to $285.23 million for the fiscal year ended March 31, 2022. Its earnings from operations grew 79.7% from the year-ago value to $28.26 million, while its net earnings increased 23.1% year-over-year to $14.07 million. The company’s EPS increased 25.2% from the year-ago value to $2.04 for the same period.
The stock has gained 32.3% over the past month to close the last trading day at $10.07.
FRD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. FRD also has an A grade for Growth, Value, and Momentum and a B for Quality. The stock is ranked #9 of 33 stocks in the A-rated Steel industry.
In addition to the POWR Rating grades I’ve just highlighted, click here to see FRD’s ratings for Stability and Sentiment.
United Microelectronics Corporation (UMC)
Headquartered in Hsinchu City, Taiwan, UMC is a global semiconductor foundry that operates through two segments: Wafer Fabrication and New Business. It offers high-quality IC fabrication services, focusing on logic and various specialty technologies to all electronics industry sectors.
On April 26, 2022, UMC’s subsidiary United Semiconductor Japan Co., Ltd., collaborated with DENSO Corporation to produce power semiconductors at its 300mm fab to serve the growing demand in the automotive market. This partnership is expected to boost domestic semiconductor production and expand UMC’s portfolio in the automotive segment.
The company’s four-year average dividend yield is 3.82%, and its forward annual dividend of $0.29 translates to a 4.30% yield. Its dividends have grown at 35.1% and 26% CAGRs over the past three and five years.
UMC’s operating revenues increased 41.5% year-over-year to NT$72.06 billion ($2.39 billion) for the second quarter ended June 30, 2022. Its gross profit increased 110.4% year-over-year to NT$33.47 billion ($1.11 billion).
The company’s net income increased 81.1% year-over-year to NT$21.49 billion ($714.46 million), while its EPS came in at NT$8.70, representing an increase of 77.5% year-over-year.
Analysts expect UMC’s EPS and revenue for the fiscal third quarter (ending September 30, 2022) to increase 78.7% and 20.2% year-over-year to $0.35 and $2.40 billion, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past month, the stock has gained marginally to close the last trading session at $6.66.
UMC’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality. It is ranked #2 out of 94 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see the other ratings of UMC for Growth, Momentum, Stability, and Sentiment.
LSI Industries Inc. (LYTS)
LYTS provides non-residential lighting and retail display solutions in the United States, Canada, Mexico, Australia, and Latin America. It operates in two segments: Lighting and Display Solutions.
On April 28, 2022, the company’s Board of Directors authorized a new share repurchase program to repurchase up to $15 million of its outstanding shares of common stock from the open market. This reflects the company’s strong cash flows and ability to boost shareholder returns.
LYTS’s four-year average dividend yield is 3.63%, and its forward annual dividend translates to a 3.18% yield.
During the fiscal 2022 third quarter (ended March 31, 2022), LYTS’s net sales increased 52.5% year-over-year to $110.11 million. Its adjusted operating income grew 137.6% from its year-ago value to $5.97 million, while its adjusted net income increased 130.3% year-over-year to $4.21 million. The company’s adjusted EPS came in at $0.15, representing a 114.3% increase year-over-year.
Analysts expect LYTS’s EPS and revenue to increase 11.1% and 12.3% year-over-year to $0.13 and $109 million in the fiscal fourth quarter (ended June 2022). It has surpassed the EPS estimates in three of the trailing four quarters, which is impressive. Over the past month, the stock has gained 4.1% to close the last trading session at $6.28.
The company has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. LYTS has an A grade for Growth and Sentiment and a B for Value.
The stock is ranked #3 of 91 in the Industrial - Equipment industry. Click here to see the other ratings of LYTS for Momentum, Stability, and Quality.
ICL shares fell $0.14 (-1.48%) in premarket trading Tuesday. Year-to-date, ICL has declined -1.25%, versus a -13.44% 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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