The major stock market indexes have been hovering near their all-time highs lately, led primarily by solid second-quarter earnings reports and the news of a substantial decline in the unemployment rate. However, market volatility still lingers, with several parts of the world witnessing a resurgence of COVID-19 cases due to the rapid spread of the highly transmissible Delta variant.

Moreover, concerns about  high inflation could fuel stock market volatility in the near term. The International Monetary Fund (IMF) has warned that inflation could be persistent. As a countermeasure, the Federal Reserve could raise interest rates as soon as early 2023, but  timing regarding the central bank’s tapering activities is still uncertain.

Amid this environment, investors could turn toward dividend-paying stocks to hedge their portfolios against short-term market volatility by ensuring a steady income stream. So, we think it could be wise to scoop up the shares of Broadcom Inc. (AVGO), Linde plc (LIN), and Starbucks Corporation (SBUX) on their fundamental strength and history of increasing dividends.

Broadcom Inc. (AVGO)

AVGO designs, develops, and supplies semiconductor infrastructure software solutions. The company’s infrastructure software solutions enable customers to plan, design, automate, manage, and secure applications across mainframe, distributed, mobile, and cloud platforms.

On June 15, 2021, AVGO introduced new, industry-first capabilities for Value Stream Management in its ValueOps software portfolio, seamlessly combining Clarity’s proven investment planning features with Rally software’s advanced agile management capabilities. This move is expected to further expand its product portfolio.

AVGO’s dividend pay-outs have grown at a 50% CAGR over the past five years and 45.9% over the past three years. While its four-year average dividend yield is 3.05%, its current dividend translates to a 2.99% yield. It paid a $3.60 per share quarterly dividend on June 30, 2021, yielding a $14.40annual dividend. Also,  it has increased its dividend for 10 consecutive years.

AVGO’s net revenue increased 15% year-over-year to $6.61 billion for its fiscal second quarter, ended May 2, 2021. Its adjusted EBITDA grew 23.4% year-over-year to $3.96 billion, while its non-GAAP net income increased 28.3% year-over-year to $2.98 billion. The company’s non-GAAP EPS increased 28.8% year-over-year to $6.62.

Analysts expect AVGO’s EPS and revenue to increase 24.2% and 14.1%, respectively, year-over-year to $27.52 and 27.25 billion in its fiscal year 2021. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 47.3% over the past year to close yesterday’s trading session at $482.26.

AVGO’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

The stock has a B grade for Quality, Stability, Growth, Momentum, and Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, AVGO is ranked #5 of 99 stocks. To see AVGO’s rating for Value as well, click here.

Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in AVGO for a 25% gain. Learn more about the RTR service here.

Click here to checkout our Semiconductor Industry Report for 2021

Linde plc (LIN)

Based in Guildford, the United Kingdom, LIN is an industrial gas company. It offers nitrogen, argon, rare gases, and electronic and specialty gases, and designs and constructs turnkey process plants, such as olefin, natural gas, air separation, and synthesis gas. It  serves the healthcare, petroleum refining, manufacturing, and beverage carbonation industries.

On July 28, 2021, LIN opened its new on-site facility in Qinzhou, China, supplying oxygen and other industrial gases to Shanghai Huayi’s new chemical complex. Will Li, LIN’s Head of Greater China, said, “With the new project on stream, we look forward to opening new avenues of cooperation between Linde and Shanghai Huayi as we continue to increase our network density in China.”

LIN’s four-year average dividend yield is 1.11%, and its current dividend translates to a 1.40% yield. The company is expected to pay a $1.06 quarterly dividend  per share on September 17, 2021. Its current dividend translates into a $4.24 annual dividend. Also, it has increased its dividend for two consecutive years.

The company’s sales increased 19% year-over-year to $7.60 billion for the second quarter, ended June 30, 2021. LIN’s adjusted operating profit for the quarter grew 39% year-over-year to $1.8 billion. Its adjusted EPS came in at $2.70, representing a 42% year-over-year rise.

LIN’s EPS is expected to increase 21.6% year-over-year to $10.01 in its fiscal year 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 9.6% year-over-year to $7.33 billion for the quarter ending September 30, 2021. The stock has rallied 24% over the past year to close yesterday’s trading session at $301.78.

LIN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. In addition, it has a B grade for Stability, Momentum, Sentiment, and Quality.

We have also graded LIN for Growth and Value. Click here to access all of LIN’s ratings. LIN is ranked #45 of 98 stocks in the A-rated Chemicals industry.

Starbucks Corporation (SBUX)

World-renowned specialty coffee company SBUX operates through three segments: Americas; International; and Channel Development. It runs roughly 32,000 stores and offers its products under the Starbucks, Teavana, Seattle’s Best Coffee, and Evolution Fresh brands.

On June 23, SBUX announced that it would open its first location in Barbados this year, in partnership with Caribbean Coffee Traders Limited, bringing its unique Starbucks Experience to local customers for the first time. This move is expected to expand its market reach.

SBUX’s dividend pay-outs have grown at a 17.6% CAGR over the past five years and 12.6% over the past three years. While its four-year average dividend yield is 1.9%, its current dividend translates to a 1.5% yield. Its annual dividend is $1.80. It has increased its dividends for 11 consecutive years. Also, SBUX is expected to pay a $0.45 per share quarterly dividend on August 27.

The company’s revenue surged 78% year-over-year to $7.50 billion for its  fiscal third quarter, ended June 27, 2021. SBUX’s non-GAAP operating income came in at $1.54 billion, versus  a $530.20 million operating loss in the prior-year period. Its non-GAAP EPS came in at $1.01 compared to a $0.46 loss per share in the year-ago period.

For its fiscal year 2021, analysts expect SBUX’s EPS to come in at $2.99, representing a 155.6% year-over-year increase. It surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its revenue is expected to increase 31.4% year-over-year to $8.15 billion for the quarter ending September 30, 2021. The stock has rallied 50.2% over the past year to close yesterday’s trading session at $116.39.

It’s no surprise that SBUX has an overall A rating, which equates to Strong Buy in our POWR Ratings system. In addition, the stock has an A grade for Growth, and a B grade for Momentum, Sentiment, and Quality.

Click here to see SBUX’s ratings for Value and Stability as well. In addition, SBUX is ranked #2 of 46 stocks in the A-rated Restaurants industry.

AVGO shares were trading at $483.69 per share on Wednesday afternoon, up $1.43 (+0.30%). Year-to-date, AVGO has gained 12.20%, versus a 19.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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