The stock market has witnessed immense volatility over the past few months due to surging inflations and the Fed’s persistent efforts to combat it by raising the interest rates aggressively. The stock market ended a choppy trading session yesterday, with major indexes declining steeply.
The S&P 500 fell by 20.6% year-to-date, while the Dow and the Nasdaq dropped 15.3% and 29.5%, respectively. On Thursday, the CBOE volatility index climbed to 29.4, almost near its psychologically critical 30 reading.
Amid the uncertain environment, dividend-paying stocks could help investors ensure a stable income stream. A steady dividend growth history indicates a company’s strong financials, healthy cash flows, and ability to pay back shareholders.
Horizon Bancorp, Inc. (HBNC) and The Kroger Co. (KR), which increased their dividends recently, could be ideal investments now. These stocks are rated Strong Buy or Buy in our proprietary POWR Ratings system.
Horizon Bancorp, Inc. (HBNC)
Headquartered in Michigan City, Indiana, HBNC offers a range of commercial and retail banking services. The company offers various deposits. It also provides commercial, residential real estate, mortgage warehouse, and consumer loans.
HBNC recently announced that its Board of Directors approved a 6.67% increase in its quarterly cash dividend from $0.15 to $0.16 per share. Its dividend payouts have grown at 13.2% and 15.7% CAGRs over the last three and five years, respectively. Its four-year average dividend yield is 2.95%, while its forward annual dividend translates to a 3.64% yield.
During the first quarter ending March 31, 2022, HBNC's net interest income increased 15.4% to $25.56 million. Its adjusted net income improved 19.6% from its prior-year quarter to $23.56 million. The company's adjusted EPS rose 22.7 year-over-year to $0.44.
The consensus EPS estimate of $0.52 for the second quarter ending June 2022 represents a 4% improvement year-over-year. Analysts expect HBNC's revenue to increase 10.4% year-over-year to $63.83 million during the first quarter ending June 2022.
The company has an impressive earnings history as it surpassed the consensus EPS estimate in all of the trailing four quarters.
HBNC's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Sentiment and a B for Growth and Momentum. Within the C-rated Mid-Atlantic Regional Banks industry, it is ranked #6 of 36 stocks.
To see additional POWR Ratings for Sentiment, Stability, Value, and Quality for HBNC, click here.
The Kroger Co. (KR)
KR functions as a retailer in the United States. The company operates combination food and drug stores which offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce, and multi-department stores which provides apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys, marketplace stores, and price impact warehouses.
Recently, KR announced a 35,000 square-foot expansion at Tamarack Farms Dairy to aid the implementation of a state-of-the-art aseptic milk line capable of manufacturing products such as half and half, heavy whipping cream, and coffee creamers, and Carbmaster milk beverage. The new line will allow the facility to support over 150 jobs.
Last month, KR announced it would offer more American delivery through the addition of a new customer fulfillment center (CFC) in Aurora, Colorado, powered by the Ocado Group, engineering a model for the region, leveraging advanced robotics technology and creative solutions to redefine the customer experience in the Denver Metro Area.
KR’s Board of Directors recently approved a dividend increase of 23.8%, from $0.84 to $1.04 per year. Its dividend payouts have grown at 14.5% and 11.8% CAGRs over the last three and five years, respectively. Its four-year average dividend yield is 1.96%, while its forward annual dividend translates to a 2.16% yield.
KR's sales increased 8% year-over-year to $44.60 billion for the first quarter ended April 30, 2022. Its operating profit amounted to $1.51 billion, up 87% from its prior-year quarter. The company’s net earnings increased 374.3% from its year-ago value to $664.00 million, while its EPS rose 400% year-over-year to $0.90.
The consensus EPS estimate of $0.73 represents a 0.1% improvement year-over-year during the third quarter ending October 2022. Analysts expect KR's revenue to increase 7.6% year-over-year to $34.09 billion during the second quarter ending July 2022.
The company also has an impressive earnings history as it surpassed the consensus EPS estimate in all of the trailing four quarters.
The company's shares have surged 23.5% over the past year and 17.1% over the past nine months.
KR's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The stock also has a B grade for Growth, Value, and Quality. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #6 of 38 stocks.
In total, we rate KR on eight different levels. Click here to see more of KR’s component grades.
HBNC shares were trading at $17.50 per share on Friday morning, up $0.08 (+0.46%). Year-to-date, HBNC has declined -14.77%, versus a -20.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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