Weak economic data released by the Chinese government is expected to keep the market on edge. Furthermore, investors remain anxious about potential interest rate hikes because the Federal Reserve could pull forward its timing on tapering asset purchases due to  rising inflation in the domestic economy. Amid the increasing uncertainty concerning the market’s momentum, investing in dividend-paying stocks may be the best option for individuals seeking  to secure an income stream.

The CBOE Volatility Index has increased 9% over the past five days as investors remain worried about the economic recovery because of the resurgence of COVID-19 cases.

So, to hedge one’s portfolio against the severe market volatility in the coming months, we think dividend-paying stocks Artisan Partners Asset Management Inc. (APAM) and Altria Group Inc. (MO) could be good  bets now. Given their strong fundamentals, these two stocks are worth holding for the long term. 

Artisan Partners Asset Management Inc. (APAM)

APAM is a publicly owned investment management company that is based in Milwaukee, Wis. It offers its services to pension and profit-sharing plans, trusts, endowments, foundations, charitable organizations, government entities, private funds, and non-U.S. funds.

APAM’s revenue increased 4.9% year-over-year to $304.9 million in the second quarter, ended June 30, 2021. Its operating income grew 13.1% from its  year-ago value to $137.8 million, while its net income surged 14.1% year-over-year to $88.2 million over this period. Its EPS increased 11.8% year-over-year to $1.33.

The company’s EPS is expected to grow 54.4% year-over-year to $5.14 in the current year. Analysts expect APAM’s revenue to increase 37.4% year-over-year to $1.24 billion in its fiscal year 2021. APAM’s stock has gained 30.3% over the past year and 9.7% over the past nine months.

APAM’s $3.68 annual dividend yields 7.5% at its current stock price. The company approved a $1 quarterly dividend, payable on August 31. It has a 10.4% four-year average dividend yield.

APAM’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

APAM is  also rated B  for Momentum and Quality. In addition,  within the Asset Management industry, it is ranked #8 of 58 stocks. To see additional POWR Ratings for Growth, Stability, Value, and Sentiment for APAM, click here.

Altria Group Inc. (MO)

MO manufactures and distributes cigarettes, oral tobacco products, and wine in the United States. It sells primarily  cigarettes under the Marlboro brand, cigars under the Black & Mild brand, and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands, as well as oral nicotine pouches. In addition , it offers financial leasing services to the transportation, power generation, real estate, and manufacturing equipment industries.

During the second quarter, ended June 30, 2021, MO’s revenue increased 8.9% year-over-year to $6.94 billion. The company’s operating income increased 13.9% year-over-year to $3.19 billion. Its net income increased 10.6% year-over-year to $2.15 billion, while its EPS grew 11.5% from the prior-year quarter to $1.16.

The company’s EPS is expected to grow 6% year-over-year to $4.62 in its fiscal year 2021. Analysts expect MO’s revenue to increase 2.2% year-over-year to $21.29 billion in the current year. The stock has gained 11.4% over the past year and 18.3% year-to-date.

MO paid an $0.86 quarterly dividend on July 09. While the four-year average dividend yield for MO is 6.4%, the current dividend translates to a 7.1% yield.

It is no surprise that MO has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Momentum and Quality, and a B for Stability. In the A-rated Tobacco industry, it is ranked #6 of 11 stocks.

In addition to the POWR Ratings grades we have just highlighted, one  can see  MO’s ratings for Growth, Value, and Sentiment here.

APAM shares were trading at $50.34 per share on Monday afternoon, up $1.20 (+2.44%). Year-to-date, APAM has gained 6.29%, versus a 20.60% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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