The uncertain trading scenario dominating the market this week continued in the last trading session as investors remained cautious about the ongoing geopolitical conflict. Major indices ended trading in the negative territory. The Nasdaq dropped 1.6%, the S&P declined 0.5%, while the Dow slipped 0.3%. Moreover, market volatility is apparent as the CBOE Volatility Index (^VIX) has surged 11.7% over the past five days.
The consumer staples sector is buoyed by persistent demand for their products and hence can generate consistent revenues, and the industry conventionally declines less during bear markets. According to Faron Daugs, wealth advisor, founder, and CEO of Harrison Wallace Financial Group, more traditional stocks like those in the consumer staples sector and paying a solid dividend seem to be good choices.
Therefore, this might be the right time to scoop up consumer staples stocks Colgate-Palmolive Company (CL), Sysco Corporation (SYY), and Walgreens Boots Alliance, Inc. (WBA) to take advantage of their dips. These stocks have more than 40 years of dividend growth and are part of the ‘Dividend Aristocrat’ group.
Colgate-Palmolive Company (CL)
CL operates as a manufacturer and seller of consumer products all over the world. The company operates through the Oral, Personal, and Home Care; and Pet Nutrition segments. The company offers toothpaste, toothbrushes, mouthwash, and pet nutrition products for everyday nutritional needs.
On January 24, CL and 3Shape, a leading digital dentistry 3D scanner software and service provider, introduced the Colgate Illuminator, an in-clinic predictive tool that shows personalized results for consumers of CL’s high-impact teeth whitening product, Colgate Optic White Professional. The new tool is expected to provide more accurate consultations and an improved patient experience.
On November 3, CL announced the pricing of the €500 million ($554.03 million) eight-year Sustainability Bond with an interest coupon of 0.300% per annum. The company intends the bond to help deliver its sustainability targets.
On January 13, CL declared a quarterly dividend of $0.45 per common share, which was payable on February 15. Its annual dividend of $1.80 yields 2.33% on current prices. The company’s dividend payouts have increased at a 2.3% CAGR over the past three years and a 2.9% over the past five years.
For the fiscal fourth quarter ended December 31, CL’s net sales increased 1.8% year-over-year to $4.40 billion. Non-GAAP net income attributable to CL came in at $666 million, while non-GAAP EPS stood at $0.79, up 0.2% and 2.6% from the prior-year period, respectively.
The consensus EPS estimate of $3.32 for the fiscal year 2022 indicates a 3.4% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $17.87 billion reflects a rise of 2.6% from the prior year.
The stock has gained 3.7% over the past year but has declined 1% over the past five days to close yesterday’s trading session at $77.40. It is currently trading 9.6% lower than its 52-week high of $85.61.
CL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CL has a Quality grade of A and a Stability grade of B. In the 62-stock Consumer Goods industry, it is ranked #12.
Click here to see the additional POWR Ratings for CL (Growth, Value, Momentum, and Sentiment).
Sysco Corporation (SYY)
SYY markets and distributes various food and related products primarily to the foodservice or food-away-from-home industry internationally. The company operates through US Foodservice Operations; International Foodservice Operations; SYGMA; and Other segments. It distributes frozen food, canned and dry food, fresh meat; and fresh produce.
On February 14, SYY announced that it had completed the acquisition of The Coastal Companies, a leading fresh produce distributor and value-added processor, which is expected to operate as a part of its specialty produce business, FreshPoint. The acquisition is also expected to enhance its service to the Mid-Atlantic region and strategically diversify its portfolio.
On January 5, SYY announced five new partnerships to enhance its supplier diversity initiatives. About this, Judy Sansone, Executive Vice-President and Chief Commercial Officer, commented, “As a leader in the foodservice industry, these new partnerships will help Sysco develop future diverse suppliers critical to meeting the evolving needs of our customers.”
On February 24, SYY declared a regular quarterly dividend of $0.47 per share, payable to common stockholders on April 22. The company’s annual dividend of $1.88 yields 2.16% on current prices. Its dividend payouts have increased at a CAGR of 8.2% and 8.1% CAGR over the past three years and five years, respectively.
SYY’s non-GAAP comparable sales using a constant currency basis increased 40.9% year-over-year to $16.28 billion in the fiscal second quarter ended January 1. Non-GAAP net earnings improved 240% from the prior-year period to $291.94 million, while non-GAAP EPS came in at $0.57, up 235.3% from the same period the prior year.
Street EPS estimate for the quarter ending June 2022 of $1.11 reflects a 56.3% year-over-year rise. Likewise, Street revenue estimate of $17.12 billion for the same period indicates an increase of 6.1% from the prior-year quarter.
Over the past six months, the stock has gained 12.6% to close yesterday’s trading session at $87.08. However, it has declined 1.5% intraday. The stock is currently trading 2.4% lower than its 52-week high of $89.22.
It’s no surprise that SYY has an overall B rating, which translates to Buy in our POWR Rating system.
SYY has a B grade for Growth and Value. It is ranked #14 out of the 84 stocks in the Food Makers industry. The industry is rated B.
To see the additional POWR Ratings for Momentum, Stability, Sentiment, and Quality for SYY, click here.
Walgreens Boots Alliance, Inc. (WBA)
WBA is a pharmacy-led health and beauty retail company operating through the two segments of the United States and International. The company offers prescription drugs and an assortment of retail products, including health and wellness, beauty, personal care, and consumable products.
On February 16, WBA and VillageMD, a national provider of value-based primary care services, announced their plans to open five new Village Medical at WBA’s coordinated primary care practices in the Jacksonville area through summer 2022. These openings are expected to expand operations into the third major market in Florida, after Orlando and Tampa.
On February 15, Walgreens Advertising Group, included in the United States segment of WBA, announced that it would be launching new self-serve programmatic and clean-room solutions. The new solutions should add to the company’s revenue stream.
On January 27, WBA declared a quarterly dividend of 47.75 cents per share, payable on March 11. Its annual dividend of $1.91 yields 4.09% on current prices. The company’s dividend payouts have increased at a 3.4% CAGR over the past three years and a 5.1% CAGR over the past five years.
For the fiscal first quarter ended November 30, WBA’s sales increased 7.8% year-over-year to $33.90 billion. Adjusted net earnings attributable to WBA rose 38.3% from the same period the prior year to $1.46 billion, while adjusted net earnings per common share came in at $1.68, up 37.7% from the prior-year period.
Analysts expect WBA’s EPS to improve 9.5% year-over-year to $1.38 for the fiscal quarter ended February 2022. Likewise, Street expects revenue for the same period to rise 1.8% from the prior-year quarter to $33.38 billion. Moreover, WBA has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has declined 5.6% over the past month but has gained 1.1% over the past five days to close yesterday’s trading session at $46.72. It is currently trading 18.1% lower than its 52-week high of $57.05.
This promising outlook is reflected in WBA’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
WBA has a Value and Sentiment grade of B. In the 4-stock Medical – Drug Stores industry, it is ranked #2. The industry is rated A.
In addition to the POWR Rating grades we’ve shown above, one can see WBA ratings for Growth, Momentum, Stability, and Quality here.
CL shares were trading at $77.20 per share on Friday afternoon, down $0.20 (-0.26%). Year-to-date, CL has declined -9.05%, versus a -9.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
Take Advantage of the Dip and Buy These 3 Dividend Aristocrats in the Consumer Staples Sector StockNews.com
