The stock market endured a challenging 2022 due to geopolitical headwinds, high inflation, and the Fed’s aggressive interest rate hikes. However, progress has been made in bringing inflation down from its high of 9.1% year-over-year rise in June. The consumer price index (CPI) fell for the sixth consecutive month in December. It increased 6.5% year-over-year and declined 0.1% sequentially.
With the central bank raising interest rates to the highest level since 2008 and minutes from its policy meeting showing that it remains committed to bringing inflation down to the 2% target, a pause in interest rate hikes is highly unlikely this year.
Hence, with the economy and stock market expected to remain under pressure this year, it could be wise to buy fundamentally strong stocks offering solid dividends.
Therefore, investors new at investing could consider buying quality stocks The Mosaic Company (MOS), Cabot Corporation (CBT), and American Vanguard Corporation (AVD), which pay dividends.
The Mosaic Company (MOS)
MOS and its subsidiaries manufacture and sell concentrated phosphate and potash crop nutrients globally. The company operates through its three broad segments of Phosphates; Potash; and Mosaic Fertilizantes.
On January 13, 2023, MOS announced that it had sold Streamsong Resort to Lone Windmill LLC, a Kemper Sports Management LLC subsidiary. The company intends to use the proceeds from the sale to fund its global community investment activities and general corporate purposes.
Over the last three years, MOS’ dividend payouts have grown at a 47.6% CAGR. Its four-year average dividend yield is 0.84%, and its forward annual dividend of $0.80 per share translates to a 1.67% yield. The company is expected to pay a quarterly dividend of $0.20 per share on March 16, 2023.
MOS’ net sales increased 56.5% year-over-year to $5.35 billion for the third quarter ended September 30, 2022. Net income attributable to MOS increased 126.3% year-over-year to $841.70 million. The company’s adjusted EPS came in at $3.22, representing an increase of 138.5% year-over-year. Also, its adjusted EBITDA increased 74% year-over-year to $1.69 billion.
Analysts expect MOS’ EPS and revenue for the quarter ending December 31, 2022, to increase 19.7% and 12% year-over-year to $2.33 and $4.30 billion, respectively. Over the past year, the stock has gained 18.5% to close the last trading session at $48.01.
MOS’ strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Growth and Quality. It is ranked #9 out of 28 stocks within the Agriculture industry. Click here to see the other ratings of MOS for Momentum, Stability, and Sentiment.
Cabot Corporation (CBT)
CBT operates as a specialty chemicals and performance materials company through two segments, Reinforcement Material; and Performance Chemicals. It offers reinforcing and specialty carbons, as well as industrial products and engineered elastomer composites solutions.
On November 3, 2022, CBT announced the launch of its new LITX 93 series of conductive carbon additives (CCA) for use in lithium-ion batteries for electric vehicles, energy storage applications, and consumer electronics. The company is expected to benefit from the rising use of lithium-ion batteries, as CCAs are essential to building and sustaining the conductive network of lithium-ion batteries.
Over the last three years, CBT’s dividend payouts have grown at a 2.4% CAGR. Its four-year average dividend yield is 2.89%, and its forward annual dividend of $1.48 per share translates to a 2.05% yield. The company is expected to pay a quarterly dividend of $0.37 per share on March 10, 2023.
For the fiscal fourth quarter ended September 30, 2022, CBT’s net sales increased 23% year-over-year to $1.11 billion. Its net income attributable to CBT increased 224.1% year-over-year to $94 million. Also, its adjusted EPS came in at $1.55, representing an increase of 39.6% year-over-year.
For the quarter ending March 31, 2023, CBT’s EPS and revenue are expected to increase 1.5% and 4.1% year-over-year to $1.72 and $1.14 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 28.2% to close the last trading session at $72.33.
CBT’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. Within the B-rated Chemicals industry, it is ranked #9 out of 89 stocks. To see the other ratings of CBT for Value, Momentum, and Stability, click here.
American Vanguard Corporation (AVD)
AVD develops, produces, and markets specialty chemicals for agricultural, commercial, and consumer purposes in the United States and globally through its subsidiaries. It sells its products through national distribution corporations, buying groups or co-operatives, sales offices, salesforce executives, sales agents, and wholly-owned distributors.
On January 17, 2023, AVD’s subsidiary AMVAC Chemical Corporation’s specialty markets division AMGUARD Environmental Technologies announced the acquisition of the product and trademark assets of American Bio-Systems.
AMGUARD CEO Shayne M. Wetherall said, “BioMop-Plus and Draingel are a great fit with AMGUARD’s portfolio and our strategy to provide compelling biological solutions to the commercial pest control industry. These formulations directly address the foodservice industry’s desire for labor-saving solutions, including the improvement of sanitation practices that currently use standard soap-based and chemical cleaning products that can only ‘break up’ food waste and grease build-up, not remove it.”
Over the last three years, AVD’s dividend payouts have grown at a 9.5% CAGR, while its five-year dividend payouts have increased at a CAGR of 11.8%. Its four-year average dividend yield is 0.44%, and its forward annual dividend of $0.12 per share translates to a 0.52% yield. The company paid a quarterly dividend of $0.03 per share on January 11, 2023.
For the fiscal third quarter ended September 30, 2022, AVD’s net sales increased 3.3% year-over-year to $152.12 million. Its gross profit rose 7.6% from the year-ago period to $61.38 million. The company’s operating income increased 25.7% year-over-year to $11.24 million. Also, its adjusted EBITDA increased 11.4% from the prior-year period to $18.91 million.
In addition, its net income increased 22.6% year-over-year to $6.74 million. Its EPS came in at $0.23, representing an increase of 27.8% year-over-year.
Analysts expect AVD’s EPS and revenue for the quarter ending December 31, 2022, to increase 78.1% and 4.2% year-over-year to $0.29 and $165.45 million, respectively. Over the past year, the stock has gained 46.7% to close the last trading session at $23.08.
It’s no surprise that AVD has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. Within the Chemicals industry, it is ranked #2.
It has a B grade for Growth, Stability, Sentiment, and Quality. Click here to see the other ratings of AVD for Value and Momentum.
MOS shares rose $0.08 (+0.17%) in premarket trading Monday. Year-to-date, MOS has gained 9.44%, versus a 3.52% 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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