The stock market has been in a tailspin in 2022 due to the raging inflation and tightening monetary policy. Moreover, U.S. GDP fell 0.9% in the second quarter, adding to the recession fears. Additionally, the personal consumption expenditures price index rose 6.8% in June, marking the biggest 12-month move since January 1982.
With heightened volatility in the market, dividend investing could be a wise strategy to ensure a stable income stream. BofA strategists write, “as cash grows more valuable amid Fed hiking, we expect dividend yield and bird-in-the-hand strategies to continue to outperform” in the second half of the year.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia; BHP operates as a resources company through its Petroleum; Copper; Iron Ore; and Coal segments.
In the previous month, BHP announced the acceleration of a $5.70 billion Jansen potash project in Canada. This is expected to benefit the company as the long-term outlook for fertilizer prices strengthens.
BHP’s $6.00 annual dividend yields 11.3% at its current share price. It paid its semi-annual dividend of $3.00 on March 28, 2022. Its dividend payouts have increased at a 43.7% CAGR over the past three years and 45.3% over the past five years. The company has a record of five consecutive years of dividend growth.
For the fiscal half year ended December 31, 2021, BHP’s revenue increased 27% year-over-year to $30.53 billion. Its profit from operations grew 50.1% from the year-ago value to $14.85 billion, while its EBITDA stood at $18.46 billion, reflecting a 33% increase year-over-year. Moreover, its EPS was 186.20 cents, up 143.4% from the prior-year quarter.
Analysts expect BHP’s revenue for the fiscal year ending June 2022 to come in at $65.60 billion, indicating an increase of 7.9% year-over-year. BHP beat the consensus EPS estimates in three of the trailing four quarters. BHP closed its last trading session at $53.02.
BHP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BHP is rated B in Stability and Quality. Within the Industrial – Metals industry, it is ranked #2 of 37 stocks. Click here to see additional BHP POWR Ratings for Growth, Momentum, Value, and Sentiment.
Rio Tinto Group (RIO)
Headquartered in London, RIO is a mining and metals company that explores for, mines, and processes mineral resources worldwide. Its segments include Iron Ore; Aluminum; Copper; and Minerals.
On August 2, RIO completed the sale of its royalty held in the Cortez mine operational area and the Fourmile development project in Nevada, to RG Royalties LLC, a wholly owned subsidiary of Royal Gold Inc., for $525 million in cash. Rio Tinto Chief Financial Officer Peter Cunningham said: “This transaction unlocks hidden value from our portfolio and releases cash immediately.”
The company’s $5.34 annual dividend yields 9% at its current share price. Its semi-annual dividend of $2.67 is payable on September 22, 2022. Its dividend payouts have increased at a 37.2% CAGR over the past three years and 36% over the past five years. The company has a record of five consecutive years of dividend growth.
RIO has gained 5.2% over the past month to close the last trading session at $59.30.
It is no surprise that the stock has an overall B rating, which translates to Buy in our proprietary rating system. RIO has an A grade in Quality and a B in Value. It is ranked #9 of 37 stocks in the Industrial – Metals industry.
Beyond what is stated above, we have also rated RIO for Momentum, Stability, Sentiment, and Growth. Get all the RIO ratings here.
Lumen Technologies, Inc. (LUMN)
LUMN is a facilities-based technology and communications company that offers various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers worldwide.
On July 26, the U.S. Customs and Border Protection (CBP) selected LUMN to provide mission-critical and resilient communication service, internet connectivity, and network services that should enhance the agency’s systems and facilities. This demonstrates the company’s solid positioning in the industry.
In the same month, LUMN announced investments in its global edge network and expansion of its edge computing solutions in Europe to provide low latency platform businesses need to extend their high-bandwidth, data-intensive applications out to the cloud edge. This expansion is a part of LUMN’s continued investment in next-generation solutions and should benefit the company.
LUMN’s $1.00 annual dividend yields 9.3% at its current share price. It paid its latest quarterly dividend of $0.25 on June 10, 2022.
LUMN’s net operating revenue came in at $4.68 billion in the fiscal first quarter ended March 31, 2022. Its operating income increased 9.7% year-over-year to $1.08 billion, while its net income stood at $599 million, up 26.1% from its prior-year quarter. The company’s EPS rose 34.1% from its year-ago value to $0.59.
The stock has gained 5% over the past three months to close the last trading session at $10.77.
LUMN’s POWR Ratings reflect its promising outlook. The stock has an overall B rating, equating to Buy in our POWR Rating system.
The company has an A grade for Value and a B for Quality. In the Telecom – Domestic industry, it is ranked #3. Click here to see the additional POWR Ratings for LUMN’s Sentiment, Growth, Stability, and Momentum grades.
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BHP shares were trading at $53.38 per share on Wednesday afternoon, up $0.36 (+0.68%). Year-to-date, BHP has gained 3.71%, versus a -12.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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