The Fed is expected to keep the interest rates at near-zero levels until 2023 because Fed Chairman Powell anticipates that there’s “much ground to cover” for employment to reach pre-pandemic levels. However, with the bank’s bond tapering expected to begin later this year, and with declining Treasury yields, investing in dividend stocks is ideal now for investors planning for retirement.
Given the increased demand for dividend stocks, many companies are undertaking robust payouts to attract investors. The Goldman Sachs Group, Inc. (GS) expects aggregate dividend payouts for the S&P 500 index will grow 6% this year and in the following year. Dividend payouts increased 26% year-over-year to $471.70 billion in the second quarter ended June 30, with 84% of the companies improving or maintaining their dividends versus prior-year quarter values. Total dividends paid to investors is expected to reach $1.39 trillion in 2021.
BHP Group Ltd. (BHP)
BHP is a natural resource organization, with two parent companies—BHP Group Limited and BHP Group Plc—that operate as one. The company is engaged in natural resource businesses, specifically minerals, oil, and gas. It operates in Petroleum; Copper; Iron Ore; and Coal segments. BHP is headquartered in Melbourne, Australia. The company had an ISS Governance QualityScore of 1 as of July 1, 2021, indicating a low governance risk.
On August 17, BHP announced a merger with Woodside Petroleum Ltd (WOPEY) to share a 48% stake in the petroleum business within the merged group. The proceeds from this merger will be used to fund the Scarborough project and developments in the Gulf of Mexico. Furthermore, an optimized capital allocation plan is expected to raise more than $400 million.
On the same day, BHP approved $5.70 billion for the Jansen stage-1 potash project in Saskatchewan, Canada. The go-forward investment is expected to have a 12% to 14% internal rate of return. Regarding the investment, BHP Chief Executive Officer Mike Henry said, “This is an important milestone for BHP and an investment in a new commodity that we believe will create value for shareholders for generations.”
On August 31, the company declared a partnership with Caterpillar Inc. (CAT) to develop zero-emission mining trucks for deployment on sites. BHP intends to venture into the low-carbon-emission future and address the global climate crisis with this partnership.
BHP recently declared a $2.00 quarterly dividend, payable September 2. Its $4.04 annual dividend yields 5.97% at the current share price. The company’s dividend payouts have increased at a 16,8% CAGR over the past three years. In addition, the company has a four-year record of consecutive annual dividend growth.
In its fiscal year ended June 30, BHP’s revenue increased 41.7% year-over-year to $60.82 billion. Its EBITDA came in at $37.38 billion, representing a 69.4% increase year-over-year. Its profit from operations and EPS rose 79.6% and 42%, respectively, from the prior year to $25.91 billion and $2.23.
Analysts expect EPS to increase 49.9% year-over-year to $10.13 in its fiscal year 2022. A $64.27 billion consensus revenue estimate for the same period indicates a 5.68% increase year-over-year. The stock has gained 21.2% in price in the past year to close yesterday’s trading session at $67.67.
BHP’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to 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.
Silvercrest Asset Management Group Inc. (SAMG)
SAMG provides asset management advice to family office services in the United States. The New York City concern’s operations include providing financial advice to high- net-worth individuals and families and managing investment funds.
SAMG’s $0.68 annual dividend yields 4.24% at the current share price. SAMG’s dividend payouts have increased at a 7.2% CAGR over the past three years. In addition, the company has a four-year record of consecutive annual dividend growth.
SAMG’s revenue for the second quarter ended June 30 increased 37.8% year-over-year to $33.10 million. Its adjusted EBITDA margin rose 3.8 percentage points from the prior-year quarter to 31.5%. Its adjusted net income improved 69.2% year-over-year to $6.70 million, while adjusted EPS increased 66.7% year-over-year to $0.45.
The $1.70 consensus EPS estimate for the current year indicates a 32.8% year-over-year increase. Likewise, the Street’s $136.49 million revenue estimate for the current year reflects a 26.4% rise year-over-year. SAMG’s stock has gained 23.7% in price in the past year to close yesterday’s trading session at $16.02.
It’s no surprise that SAMG has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
In addition, SAMG has an A grade for Growth, and a B grade in Momentum, Sentiment, and Quality. The stock is ranked #1 out of 58 stocks in the Asset Management industry. Click here to see additional POWR Ratings for SAMG (Value and Stability).
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BHP shares were trading at $65.92 per share on Tuesday afternoon, down $1.75 (-2.59%). Year-to-date, BHP has gained 6.19%, versus a 21.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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