Surging inflation and impending interest increases are concerning investors. Furthermore, soaring oil and gas prices and supply disruption due to sanctions on Russia are putting further pressure on the stock market. However, hopes of an economic rebound still remain as worldwide COVID-19 restrictions continue to ease.
Therefore, it could be wise to invest in quality dividend stocks to ensure a steady income stream and dodge short-term market fluctuations. Investors’ interest in this strategy is evidenced by the Global X S&P 500 Quality Dividend ETF’s (QDIV) 5.6% returns over the past six months versus the SPDR S&P 500 Trust ETF’s (SPY) 5.7% decline.
We think strong fundamentals and impressive dividend yields make under-$10 stocks Ambev S.A. (ABEV), United Microelectronics Corporation (UMC), Centrais Elétricas Brasileiras S.A. - Eletrobrás (EBR), Companhia Siderúrgica Nacional (SID) and Yamana Gold Inc. (AUY) solid bets now.
Ambev S.A. (ABEV)
Headquartered in São Paulo, Brazil, ABEV, through its subsidiaries, produces, distributes, and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food products in the Americas. It has three segments: Brazil; Central America and the Caribbean; Latin America South; and Canada.
While the four-year average dividend yield for ABEV is 3.35%, its current dividend translates to a 3.23% yield.
ABEV’s net revenue increased 18.6% year-over-year to R$22.01 billion ($4.34 billion) for the fourth quarter, ended Dec. 31, 2021. The company’s gross profit came in at R$11.51 billion ($2.27 billion), up 11.2% year-over-year. Also, its total assets came in at R$138.60 billion (27.31 billion) for the period ended Dec. 31, 2021, compared to R$125.20 billion ($24.67 billion) for the period ended Dec. 31, 2020.
Analysts expect ABEV’s revenue to increase 10.3% year-over-year to $14.89 billion in its fiscal year 2022. Its EPS is estimated to grow 9.6% per annum for the next five years. The stock closed Friday’s session at $2.60.
ABEV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ABEV has an A grade for Quality and a B for Stability and Sentiment. Within the B-rated Beverages industry, it is ranked #10 of 37 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for ABEV.
United Microelectronics Corporation (UMC)
Headquartered in Hsinchu City, Taiwan, UMC is a semiconductor wafer foundry that operates in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally. It operates through Wafer Fabrication and New Business segments.
On Jan. 25, 2022, Jason Wang, UMC’s co-president, said, “Looking ahead into Q1 2022, we anticipate that demand across all nodes in UMC’s addressable markets will continue to outpace supply. Our growth in the long term is supported by industry megatrends, which will be catapulted by structural changes occurring in the industry.”
Over the last three years, UMC’s dividend payouts have grown at a 35.1% CAGR. While UMC's four-year average dividend yields 3.61%, its current dividend translates to a 3.19% yield.
UMC’s operating revenues came in at $2.14 billion for the fourth quarter, ended Dec. 31, 2021, up 30.5% year-over-year. Its net income came in at $578 million, up 46.7% year-over-year, while its EPS came in at $0.24, up 41.6% year-over-year.
Analysts expect UMC’s revenue to be $9.39 billion in its fiscal year 2022, representing a 22% year-over-year rise. The company’s EPS is also expected to increase, by 34.1% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock closed Friday’s session at $8.99.
UMC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
It has a B grade for Growth, Value, Momentum, and Quality. It is ranked #3 of 97 stocks in the A-rated Semiconductor & Wireless Chip industry. Click here to see the additional ratings for UMC (Stability and Sentiment).
Click here to checkout our Semiconductor Industry Report for 2022
Centrais Elétricas Brasileiras S.A. - Eletrobrás (EBR)
Based in Rio de Janeiro, Brazil, EBR, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in Brazil. The company generates electricity through hydroelectric, thermal, nuclear, wind, and solar plants.
EBR’s four-year average dividend yield is 3.38%. Its current dividend translates to an 11% yield.
EBR’s cash and cash equivalents came in at R$5.77 billion ($1.14 billion) for the period ended Sept. 30, 2021, compared to R$3.86 billion ($760.52 million) for the period ended Dec. 31, 2020. Its current assets came in at R$ 45.21 billion ($8.91 billion), compared to R$45.19 billion ($8.90 billion), for the same period. Furthermore, its total assets came in at R$193.26 billion ($38.08 billion), compared to R$ 178.97 billion ($35.26 billion) for the same period.
EBR surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past month, the stock has gained 4.1% in price to close Friday’s trading session at $6.66.
It is no surprise that EBR has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has a B grade for Value, Momentum, and Quality.
EBR is ranked #11 out of 56 stocks in the B-rated Utilities - Foreign industry. Click here to see the additional POWR Ratings for EBR (Growth, Stability, and Sentiment).
Companhia Siderúrgica Nacional (SID)
Headquartered in Sao Paulo, Brazil, SID operates as an integrated steel producer in Brazil and Latin America. The company operates in five segments: Steel; Mining; Logistics; Energy; and Cement.
While the four-year average dividend yield for SID is 3.56%, its current dividend translates to a 7.26% yield.
SID’s net sales revenue increased 5.8% year-over-year to R$10.36 billion ($2.04 billion) for the fourth quarter, ended Dec. 31, 2021. Its cash and cash equivalents came in at R$16.65 billion ($3.28 billion) for the period ended Dec. 31, 2021, compared to R$9.94 billion ($1.96 billion) for the period ended Dec. 31, 2020. Its current assets were R$ 34.97 billion ($6.89 billion), compared to R$ 23.39 billion ($4.61 billion)for the same period in the prior year.
For the quarter ending March 31, 2022, analysts expect SID’s revenue to be $2.63 billion, representing a 7.8% year-over-year rise. In addition, the company’s EPS is expected to increase 3.9% per annum over the next five years. Over the past three months, the stock has gained 17.2% in price to close Friday’s trading session at $5.05.
SID has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Quality and a B grade for Value, Momentum, and Sentiment. Click here to see SID’s rating for Growth, Stability as well. It is ranked #20 of 33 stocks in the A-rated Steel industry.
Note that SID is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Yamana Gold Inc. (AUY)
Headquartered in Toronto, Canada, AUY and its subsidiaries operate as a precious metal producer. It has gold and silver production, development stage properties, exploration properties, and land positions throughout the Americas.
AUY’s dividend payouts have grown at the rate of 77.8% over the past three years. While the four-year average dividend yield for AUY is 1.20%, its current dividend translates to a 2.17% yield.
AUY’s revenue increased 9.1% year-over-year to $503.80 million for the fourth quarter, ended Dec. 31, 2021. Its net earnings came in at $109.70 million, up 6.5% year-over-year, while its EPS remained constant at $0.11.
AUY’s revenue is expected to grow at 9% year-over-year to $476.68 million for the quarter ended June 30, 2022. Over the past month, the stock has gained 25.5% in price to close Friday’s trading session at $5.52.
AUY’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has a B grade for Quality. AUY is ranked #9 of 34 stocks in the Miners - Gold industry. Click here to see the additional POWR Ratings for AUY (Growth, Value, Momentum, Sentiment, and Stability).
Click here to check out our Gold and Silver Industry Report for 2022
What To Do Next?
If you would like to see more top stocks under $10, then you should check out our free special report:
What gives these stocks the right stuff to become big winners?
First, because they are all low-priced companies with explosive growth potential that excel in key areas of growth, sentiment, and momentum.
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Click below now to see these 3 exciting stocks which could double (or more!) in the year ahead:
ABEV shares were trading at $2.61 per share on Monday morning, up $0.01 (+0.38%). Year-to-date, ABEV has declined -6.79%, versus a -11.43% 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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