Volatility is often seen as a constituent of a healthy stock market. However, sometimes high volatility can be painful for investors. The stock market was volatile yesterday and has been since the beginning of the year. Despite trading higher earlier in the day, the S&P 500 fell 0.3%, and the Nasdaq composite ended lower at 14,015.67, down 82.34 points. At the same time, the Dow Jones Industrial Average finished just 1.39 points higher.
The stock market has been experiencing wild price swings due to the investors’ concerns over rising inflation, geopolitical tensions between the U.S. and Russia over Ukraine, and the Fed’s signal that it will likely raise interest rates multiple times this year. According to BofA Securities’ U.S. head of equity and quantitative research, Savita Subramanian, “It’s going to be a year where we are shocked by the volatility.” Her price target for the S&P 500 is 4,600. “Between today and year-end, we’re going to hit that target multiple times, and we’re going to see some big swings from the market,” she predicted.
Therefore, we think investors looking to hedge their portfolios against increased market swings could consider adding quality dividend-yielding stocks McKesson Corporation (MCK), AmerisourceBergen Corporation (ABC), and ORIX Corporation (IX) to their portfolios. These stocks could ensure a steady stream of income with limited downside potential. Our proprietary POWR Ratings system has rated these stocks A or B for Stability along with an overall Strong Buy or Buy rating.
McKesson Corporation (MCK)
San Francisco-based MCK provides healthcare supply chain management, retail pharmacy, community oncology, specialty care, and healthcare information solutions. The company is focused on distributing pharmaceuticals and providing health information technology, medical supplies, and care management tools. It operates in the U.S. Pharmaceuticals, International, Medical-Surgical Solutions, and Prescription Technology Solutions segments.
On Dec. 20, 2021, MCK announced that it had agreed to sell its Austrian business to Quadrifolia Management GmbH. The transaction includes the sale of Herba Chemosan Apotheker-AG and Sanova Pharma GesmbH. CEO Brian Tyler said, “Today’s transaction marks another milestone in advancing McKesson’s intent to streamline the portfolio and prioritize investments in areas where we have deep expertise and are central to our long-term growth strategy.”
Over the last three years, MCK’s dividend payout has grown at a 6.8% CAGR. Its four-year average dividend yield is 1%, and its current dividend translates to a 0.7% yield. The company is expected to pay a quarterly dividend of $0.47 per share on April 1, 2022.
MCK’s revenues for its fiscal third quarter, ended Dec. 31, 2021, increased 10% year-over-year to $68.61 billion. The company’s adjusted earnings rose 27% year-over-year to $944 million. Also, its non-GAAP EPS came in at $6.15, versus $4.60 in the year-ago period.
Analysts expect MCK’s EPS and revenue for its fiscal 2022 to increase 34.5% and 9.2%, respectively, year-over-year to $23.15 and $260.14 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 47.6% in price to close the last trading session at $270.20.
MCK’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, which translates to a Strong Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Value and a B grade for Growth, Stability, and Sentiment. It is ranked #2 out of 88 stocks in the Medical – Services segment. Click here to see the ratings of MCK for Momentum and Quality.
Click here to checkout our Healthcare Sector Report for 2022
AmerisourceBergen Corporation (ABC)
ABC sources and distributes pharmaceutical products. The Chesterbrook, Pa.-based company’s segments include Pharmaceutical Distribution Services and Other. It provides services to healthcare providers and pharmaceutical and biotech manufacturers.
On Jan.25, 2022, ABC and TrakCel announced an integrated technology platform to accelerate patient access to prescribed cell and gene therapies and deliver complete visibility throughout the treatment journey. The offering adds to ABC’s portfolio of services and solutions that support the needs of cell and gene therapy innovators, providers, and patients, from pre-clinical to market access and reimbursement consulting and patient support services.
Over the last three years, ABC’s dividend payout has grown at a 4.9% CAGR. While its four-year average dividend yield is 1.7%, its current dividend translates to a 1.3% yield.
For its fiscal first quarter, ended Dec. 31, 2021, ABC’s revenues increased 13.5% year-over-year to $59.62 billion. The company’s non-GAAP operating income increased 21.4% year-over-year to $749.14 million. Also, its non-GAAP net income increased 21% year-over-year to $545.38 million. In addition, its non-GAAP EPS came in at $2.58, representing an 18.3% increase year-over-year.
For the quarter ending June 30, 2022, ABC’s EPS is expected to increase 21.3% year-over-year to $2.62. Its revenue for fiscal 2022 is expected to increase 10.9% year-over-year to $237.32 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 27% in price to close the last trading session at $139.41.
ABC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, and Sentiment. It is ranked #3 in the Medical – Services industry. To see the other ratings of ABC for Momentum and Quality, click here.
Click here to checkout our Healthcare Sector Report for 2022
ORIX Corporation (IX)
Headquartered in Tokyo, Japan, IX provides diversified financial services. It operates in the Corporate Financial Services and Maintenance Leasing; Real Estate; PE Investment and Concession; Environment and Energy; Insurance; Banking and Credit; Aircraft and Ships; ORIX USA; ORIX Europe; and Asia and Australia segments.
On Dec. 27, 2021, IX announced a partnership with Mitsubishi Fuso Truck and Bus Corporation to introduce customers to the environmentally friendly electricity retail business. IX will introduce environmentally friendly electricity to corporate customers nationwide. The service will support transportation and other industries trying to decarbonize by achieving RE100 and reducing carbon emissions.
Over the last three years, IX’s dividend payout has grown at a 5.8% CAGR. Its four-year average dividend yield is 3.8%, and its current dividend translates to a 3.2% yield.
IX’s revenues for the nine months ended Dec.31, 2021, increased 12% year-over-year to ¥1,868.11 billion ($16.22 billion). The company’s net income increased 49% year-over-year to ¥211.34 billion ($1.83 billion). Also, its EPS came in at ¥174.98, up 53.3% year-over-year.
Analysts expect IX’s EPS and revenue for fiscal 2022 to increase 56.8% and 412.7%, respectively, year-over-year to $11.13 and $22.03 billion. Over the past nine months, the stock has gained 25.8% in price to close the last trading session at $104.15.
IX’s POWR Ratings reflect solid prospects. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, and Sentiment. It is ranked first in the Foreign Consumer Finance industry. Click here to see the ratings of IX for Momentum and Quality.
MCK shares rose $1.80 (+0.67%) in premarket trading Tuesday. Year-to-date, MCK has gained 8.70%, versus a -5.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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