As the Federal Reserve tries to reduce rising prices by hiking interest rates, borrowing and spending have become costlier for businesses and individuals. “Borrowing costs for homebuyers, car buyers, and credit card borrowers have increased at the fastest pace in decades,” stated chief financial analyst Greg McBride.
As the current situation is not expected to ease anytime soon, investors can take advantage of dividend-paying stocks to protect themselves against high inflation and uncertain market conditions. Investors’ interest in dividend stocks is evident from SPDR S&P Dividend ETF’s (SDY) 6.9% return over the past month.
Therefore, investors looking to build a dividend portfolio must buy fundamentally strong and consistent dividend-paying stocks Pfizer Inc. (PFE), ICL Group Ltd (ICL), and ARC Document Solutions, Inc. (ARC).
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic and women's health, biosimilars, sterile injectable and anti-infective medicines, and oral COVID-19 treatment.
PFE will pay a $0.40 fourth-quarter cash dividend on December 5, 2022. It has a four-year dividend yield of 3.62%. Its current dividend translates to a 3.50% yield. Over the past three years, its dividend has grown at a CAGR of 5.7%.
On October 5, 2022, PFE announced its acquisition of Global Blood Therapeutics, Inc. (GBT). PFE’s Chief Business Innovation Officer and Executive VP, Aamir Malik, said, “With Global Blood Therapeutics’ talent, portfolio, and pipeline now part of Pfizer, we look forward to accelerating innovation and expeditiously bringing multiple potential best-in-class treatments to people living with sickle cell disease.”
For the fiscal second quarter ended July 3, 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. The company’s adjusted net income increased 94% year-over-year to $11.65 billion. Additionally, its adjusted EPS came in at $2.04, representing a 92% increase from the prior-year quarter.
PFE’s EPS for the quarter ended September 30, 2022, is expected to increase 4.5% year-over-year to $1.40. Its revenue for the quarter ending December 31, 2022, is expected to increase 3.7% year-over-year to $24.72 billion.
It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 6.4% to close the last trading session at $45.74.
PFE’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Medical - Pharmaceuticals industry, it is ranked #9 out of 162 stocks. The company has an A grade for Value and a B for Quality.
Click here to see the additional POWR Ratings of PFE for Growth, Momentum, Stability, and Sentiment.
ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL, together with its subsidiaries, operates as a specialty minerals and chemicals company worldwide. It operates in four segments: Industrial Products, Potash, Phosphate Solutions, and Innovative Ag Solutions (IAS).
Its current dividend translates to a 12.83% yield. It has a four-year dividend yield of 3.6%. Over the past three years, its dividend has grown at a CAGR of 55%.
On August 16, 2022, ICL and Evogene Ltd. (EVGN) announced a multi-year, strategic collaboration agreement between ICL and Lavie Bio Ltd., a subsidiary of Evogene. President of Innovative Ag Solutions for ICL, Mr. Elad Aharonson, believes this collaboration resonates with the company’s sustainability goals and values.
It demonstrates ICL’s commitment to bringing new, sustainable technologies to market for its customers, providing a strong platform to enter the ag-biologicals market.
ICL’s sales increased 78.1% year-over-year to $2.88 billion for the second quarter ended June 30, 2022. The company’s gross profit increased 170% from the year-ago period to $1.54 billion. Its operating income gained 368.7% year-over-year to $1.14 billion, while its adjusted net income attributable increased 456% year-over-year to $751 million.
Also, its adjusted EBITDA increased 249% year-over-year to $1.25 billion. In addition, its EPS came in at $0.44, representing a 300% increase from the prior-year quarter.
ICL’s EPS and revenue for the third quarter ended September 2022, are expected to increase 172.2% and 48.6% year-over-year to $0.45 and $2.66 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 8.9% to close the last trading session at $9.05.
ICL’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to a Strong Buy in our proprietary rating system. It is ranked #1 in the Agriculture industry. It has an A grade for Growth and a B for Value and Quality.
We have also given ICL grades for Momentum, Stability, and Sentiment. Get all ICL ratings here.
ARC Document Solutions, Inc. (ARC)
ARC, a digital printing company, provides digital printing and document-related services in the United States. It provides managed print services, cloud-based document management software, and other digital hosting services. The company also offers professional and software services to re-produce and distribute documents of different formats and specialized graphic color printing.
ARC has a four-year dividend yield of 1.72%. Its current dividend translates to an 8.2% yield.
For the fiscal second quarter ended June 30, 2022, ARC’s net sales increased 8.4% year-over-year to $74.56 million. The company’s gross profit increased 12% year-over-year to $25.54 million. Its adjusted net income attributable to ARC increased 42.3% year-over-year to $3.70 million.
In addition, its adjusted EPS came in at $0.08, representing a 33.3% increase from the prior-year quarter. Also, its adjusted EBITDA increased 2.3% year-over-year to $11.33 million.
Analysts expect ARC’s EPS for fiscal 2022 to increase 22.7% year-over-year to $0.27. Its revenue for the quarter ending December 31, 2022, is expected to increase 2% year-over-year to $70.60 million. Over the past month, the stock has gained 1.2% to close the last trading session at $2.44.
ARC’s POWR Ratings reflect this positive outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. It is ranked #2 out of 45 stocks in the B-rated Outsourcing - Business Services industry. In addition, it has an A grade for Value, Sentiment, and Quality and a B for Stability.
Click here to see the other ratings of ARC for Growth and Momentum.
PFE shares were trading at $47.43 per share on Friday afternoon, up $1.69 (+3.69%). Year-to-date, PFE has declined -17.77%, versus a -17.17% 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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