The December CPI marked the sixth-straight monthly decline, as prices rose 6.5% annually, down from 7.1% in November 2022. However, Simona Mocuta, Chief economist at State Street Global Advisors, said, “We know that we won’t get the same kind of support from gasoline prices, so don’t expect the next report to look as good as this one.”
St. Louis Fed President James Bullard recently noted that inflation is still far above the Fed’s 2% goal, and he would like the central bank’s policy rate to exceed 5% “as soon as possible.” As indicated by the Fed officials, interest rate hikes, though slow in pace, are likely to continue for this year, enhancing the chances of the much-anticipated recession.
Moreover, the World Bank has warned that the global economy would come “perilously close” to a recession soon, owing to slower growth in all of the world’s major economies — the United States, Europe, and China. Moreover, the U.S. also remains vulnerable to further supply chain disruptions if COVID-19 keeps surging or Russia’s war in Ukraine worsens.
Amid widespread recessionary concerns, stocks that offer high and stable dividends are a safe haven for investors. Consequently, investors’ interest in dividend stocks is evident from the SPDR S&P Dividend ETF’s (SDY) 11.4% returns over the past three months and 8.1% over the past six months.
AbbVie Inc. (ABBV)
Biopharmaceutical company ABBV engages in the research, development, manufacturing, commercialization, and sale of medicines worldwide. The company’s products are segmented into Immunology; Oncology; Anaesthetics; Neuroscience; Eyecare; Women’s Health; and Others.
On January 10, 2023, ABBV and Anima Biotech established a partnership to identify and develop mRNA biology modulators for three Oncology and Immunology targets. The collaboration is expected to contribute toward the company’s cancer treatment capabilities.
ABBV also has the option to expand the collaboration with up to three additional targets under the same terms as the initial collaboration, which may increase the potential value of the collaboration.
Moreover, on January 9, ABBV announced that Health Canada approved QULIPTA for the prevention of episodic migraine (< 15 migraine days per month) in adults. QULIPTA is the first and only oral calcitonin gene-related peptide receptor antagonist preventive treatment and marks the latest innovation in the company’s migraine portfolio.
On October 28, the company declared a 5% raise in its quarterly cash dividend from $1.41 per share to $1.48 per share, which is payable on February 15, 2023.
Its four-year average dividend yield is 4.62%, and its current dividend of $5.92 translates to a 3.87% yield annually. Over the past three and five years, ABBV’s dividend payouts have grown at 9.2% and 16.9% CAGRs respectively. Also, it has paid dividends for nine consecutive years.
ABBV’s net revenues came in at $14.81 billion for the third quarter that ended September 30, 2022, increasing 3.3℅ year-over-year. Its net earnings grew 24.2% year-over-year to $3.95 billion, while its EPS increased 29.3% year-over-year to $3.66.
Its revenue is expected to increase 2.9% year-over-year to $15.32 billion for the fourth quarter ended December 2022. Its EPS is expected to grow 10.2% year-over-year to $3.65 for the same quarter. It has surpassed EPS estimates in each of the four trailing quarters, which is impressive.
Over the past year, the stock has gained 12.5% to close the last trading session at $152.83.
ABBV’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B for Growth and Value. In the Medical – Pharmaceuticals industry, it is ranked #8 out of 168 stocks.
Click here for the additional POWR Ratings for Sentiment, Momentum, and Stability for ABBV.
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company focusing on developing and commercializing medicine for treating life-threatening diseases, including HIV, viral hepatitis, and cancer.
On January 3, 2022, GILD announced that the European Medicines Agency (EMA) had validated the Marketing Authorization Application (MAA) for Trodelvy to treat adult patients with pre-treated HR+/HER2- metastatic breast cancer.
On the same day, GILD, and EVOQ Therapeutics, Inc. announced a collaboration and licensing agreement to advance EVOQ’s proprietary technology for treating rheumatoid arthritis (RA) and lupus. Under the agreement, GILD would receive the rights to exclusively license EVOQ’s NanoDisc technology to develop and commercialize immunotherapy products clinically.
The company pays an annual dividend of $2.92, which yields 3.42% at the current price level. Its dividend payouts have increased at a 5% CAGR over the past three years and a 7% CAGR over the past five years. GILD has a record of seven years of consecutive dividend growth.
GILD’s total product sales, excluding Veklury, increased 11% year-over-year to $6.05 billion for the fiscal third quarter that ended September 30, 2022. The company’s oncology sales rose 79% from the prior-year period to $578 million. Also, its non-GAAP attributable net income and non-GAAP EPS amounted to $2.39 billion and $1.90 for the quarter.
GILD’s EPS is expected to increase 116% year-over-year to $1.49 for the fourth quarter ended December 2022. Its revenue is expected to come in at $6.64 billion in the same quarter. Moreover, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 38.2% over the past nine months and 28.7% over the last three months to close the last trading session at $85.41.
It is no surprise that GILD has an overall A rating which equates to a Strong Buy in our POWR Ratings system.
GILD has an A grade for Value and a B for Sentiment and Quality. Out of the 397 stocks in the Biotech industry, it is ranked #4.
To see the other ratings of GILD for Growth, Momentum, and Stability, click here.
Marine Products Corporation (MPX)
MPX designs, manufactures, and sells recreational fiberglass powerboats worldwide for sport boats, fishing, and jet boat markets.
On October 26, MPX declared a 17% increase to the regular quarterly dividend, from $0.12 per share to $0.14 per share, which was payable December 9, 2022.
Over the last five years, MPX’s dividend payouts have grown at 12.3% CAGR. While MPX’s four-year average dividend yield is 3.82%, its current dividend of $0.56 translates to a 4.03% yield on the prevailing price.
MPX’s net sales rose 24.2% year-over-year to $100.06 million in the third quarter ended September 30, 2022. Its net income came in at $11.47 million, up 71.6% year-over-year, and its EPS grew 70% year-over-year to $0.34.
The stock has gained 39.5% over the past six months to close the last trading session at $13.91. It has gained 58.6% over the past three months.
MPX’s POWR Ratings reflect its solid prospects. Its overall A rating equates to a Strong Buy in our POWR Ratings system.
It has an A grade for Growth and a B for Quality, Stability, and Sentiment. It is ranked first among the 37 stocks in the Athletics & Recreation industry.
Beyond what is stated above, we’ve also rated MPX for Value and Momentum. Get all MPX ratings here.
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ABBV shares rose $0.15 (+0.10%) in premarket trading Wednesday. Year-to-date, ABBV has declined -4.44%, versus a 4.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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