Thanks to increases in consumer spending, government spending, private inventory investment, and non-residential fixed investment, the U.S. GDP rose at a 2.9% annualized pace in the fourth quarter. Spurred by the cooling signs of inflation in the past few months, the central bank scaled back to a quarter-percentage-point rate increase after a year of massive hikes.

While the investors and equity markets rejoiced, Fed Chair Jerome Powell suggested a ‘couple’ more hikes in the upcoming months. Such hawkish comments indicate that a Fed pivot is not on the horizon even as global economic recession fears loom.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned to be cautious as she expects global growth to drop to 1.9% this year from 3% in 2022 because of overlapping crises such as the Ukraine war, surging inflation, debt tightening, and the climate emergency. Moreover, the World Bank sees growth sliding to 1.7%.

Investors all over the world are increasingly exploring dividend investments to help them get through market volatility. Dividend-paying stocks provide long-term investors with a steady stream of passive income to help offset the adverse effects of inflation. These stocks reward investors with regular payouts of company profits.

Amid this backdrop, investors looking for passive income could load up quality dividend-paying stocks BHP Group Limited (BHP) and Gilead Sciences, Inc. (GILD), which can provide a defensive layer to one’s portfolio.

BHP Group Limited (BHP)

Headquartered in Melbourne, Australia, BHP operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. It operates through Petroleum; Copper; Iron Ore; and Coal segments.

On December 12, 2022, BHP collaborated with I-ROX, under which the companies would work together to accelerate the development of I-ROX’s technology and business, and BHP would be offered direct access to this potentially disruptive technology. BHP also made an equity investment in and collaborated with I-Pulse to identify new applications for pulsed-power technology in a mining context.

The collaboration with I-Pulse and I-ROX is expected to enhance BHP’s growing portfolio of options with the potential to improve the competitiveness of its business and help decarbonize it.

BHP’s four-year average dividend yield is 7.84%, and its forward annual dividend of $7 translates to a 9.99% yield. Its dividends have grown at 37.6% and 33.1% CAGRs over the past three and five years, respectively. On September 22, the company paid a dividend of $1.75 per share to its shareholders.

For the fiscal year that ended June 30, 2022, BHP’s revenues increased 14.4% to $65.10 billion. Its underlying attributable profit and underlying basic earnings per ordinary share came in at $23.82 billion and $4.71, increasing 39.5% and 39.4% year-over-year, respectively. Also, its underlying EBITDA came in at $40.63 billion, up 15.9% year-over-year.

For the fiscal year 2023 (ending June 30), Street expects BHP’s EPS to increase 10.9% year-over-year to $5.22. Over the past six months, the stock has gained 29.4% to close the last trading session at $70.10.

BHP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates 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.

It has a B grade for Value, Sentiment, and Quality. Among 37 stocks in the Industrial – Metals industry, it is ranked first. Click here to see the other ratings of BHP for Growth, Momentum, and Stability.

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 30, Kite, a GILD company, and Arcellx, Inc. (ACLX) announced a strategic collaboration to co-develop and co-commercialize ACLX’s lead late-stage clinical CART-ddBCMA for the treatment of patients with relapsed or refractory multiple myeloma.

On January 3, 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. Given the limited treatment options, this plays a significant role in making Trodelvy accessible to more patients across the European Union.

On the same day, GILD and EVOQ Therapeutics, Inc. announced a collaboration and licensing agreement to advance EVOQ’s proprietary technology to treat 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’s annual dividend of $2.92 yields 3.48% 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.

Excluding Veklury, GILD’s total product sales increased 11% year-over-year to $6.05 billion for the fiscal third quarter that ended on September 30, 2022. The company’s non-GAAP attributable net income and non-GAAP EPS amounted to $2.39 billion and $1.90 for the same period.

Its current liabilities declined 7.9% to $62.56 billion for the period that ended September 30, 2022, compared to $67.95 billion for the fiscal year that ended December 31, 2022.

For the quarter that ended on December 31, 2022, GILD’s EPS is expected to increase 118.3% year-over-year to $1.51. It surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive. Over the past nine months, the stock has gained 41.6% to close the last trading session at $84.

GILD’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

It also has an A grade for Value and a B for Sentiment and Quality. Out of the 402 stocks in the Biotech industry, it is ranked #3. To see the other ratings of GILD for Growth, Momentum, and Stability, click here.

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BHP shares were trading at $67.39 per share on Thursday afternoon, down $2.71 (-3.87%). Year-to-date, BHP has gained 8.61%, versus a 9.09% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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