According to data from FactSet, 41 S&P 500 companies have reported third-quarter results so far, with 80% of them topping EPS expectations. However, U.S. oil prices jumped another 1%, surpassing $83 per barrel, their highest level since October 2014. In addition, the 10-year Treasury yield this week started edging back up toward 1.62%. So, market volatility will likely continue amid increasing inflation.
Against this backdrop, investors are turning to dividend-yielding stocks to ensure a steady income stream. Investors’ interest in dividend stocks is evidenced by the SPDR S&P Dividend ETF’s (SDY) 3.2% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 2.2% returns.
So, it could be wise to scoop up the shares of GlaxoSmithKline plc (GSK), Fortescue Metals Group Limited (FSUGY), Kronos Worldwide, Inc. (KRO), and USD Partners LP (USDP) on their fundamental strength and attractive dividends. Their current dividend yields exceed 5%.
GlaxoSmithKline plc (GSK)
Based in Brentford, in the United Kingdom, healthcare company GSK operates through two segments: Pharmaceuticals and Vaccines. The company’s main research area includes respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, vaccines, immuno-inflammation, oncology, and rare diseases.
On August 17, GSK announced that the FDA had approved a new indication for JEMPERLI, a programmed cell death receptor-1 blocking antibody, to treat adult patients with mismatch repair-deficient recurrent or advanced solid tumors. This therapy is expected to boost the company’s revenue in the near to midterm.
GSK’s dividend pay-outs have grown at a 0.23% CAGR over the past five years and 9.59% over the past three years. While its four-year average dividend yield is 5.30%, its current dividend translates to a 5.63% yield. It paid a $0.52 per share quarterly dividend on October 7, 2021, yielding an annual dividend of $2.20.
GSK’s turnover increased 6% year-over-year to £8.09 billion ($11.06 billion) for the second quarter, ended June 30, 2021. Its adjusted operating profit grew 23% year-over-year to £2.16 billion ($2.95 billion), while its adjusted earnings per share increased 46% year-over-year to 28.10p.
Analysts expect GSK’s EPS and revenue to increase 8.4% and 5.2%, respectively, year-over-year to $3.11 and $47.68 billion in its fiscal year 2022. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 8.4% in price to close Friday’s trading session at $39.01.
It’s no surprise that GSK has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Growth and Value and a B grade for Stability and Sentiment. Click here to see GSK’s ratings for Quality and Momentum as well. GSK is ranked #3 of 211 stocks in the Medical – Pharmaceuticals industry.
Fortescue Metals Group Limited (FSUGY)
FSUGY explores for, develops, produces, processes, and sells iron ore, copper, and gold deposits. It owns and operates the Chichester Hub in the Chichester ranges and Solomon Hub in Hamersley ranges of Pilbara, Western Australia. In addition, the East Perth, Australia, company holds a portfolio of properties situated in Ecuador and Argentina, and it also provides port towage services.
FSUGY’s dividend pay-outs have grown at an 87.31% CAGR over the past five years and 148.12% over the past three years. While its four-year average dividend yield is 9.64%, its current dividend translates to a 27.76% yield. Its annual dividend is $6.05. Also, FSUGY paid a $3.03 per share semi-annual dividend on October 7.
For its fiscal year ended June 30, 2021, FSUGY’s revenue increased 74% year-over-year to $22.28 billion. Its underlying EBITDA rose 96% year-over-year to $16.37 billion. The company’s underlying net profit after tax increased 118% year-over-year to $10.35 billion, while its EPS grew 117% year-over-year to 335 cents.
FSUGY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Quality and Value as well.
Kronos Worldwide, Inc. (KRO)
KRO produces and markets titanium dioxide pigments internationally. The Dallas, Tex., company also produces ilmenite, iron-based chemicals, titanium oxychloride, and titanyl sulfate. In addition, the company provides technical services for its products. It sells its products under the KRONOS brand through agents and distributors.
KRO’s dividend pay-outs have grown at a 3.71% CAGR over the past five years and 2.94% over the past three years. While its four-year average dividend yield is 4.91%, its current dividend translates to a 5.45% yield. It paid a $0.18 per share quarterly dividend on September 16, 2021, yielding a $0.72 annual dividend.
KRO’s net sales increased 24% year-over-year to $478.60 million for the second quarter, ended June 30, 2021. Its EBITDA grew 23.3% year-over-year to $52.90 million, while its net income increased 38.2% year-over-year to $25.70 million. Also, its EPS increased 37.5% year-over-year to $0.22.
KRO’s EPS is expected to come in at $0.20 for the quarter ending December 30, 2021, representing a 122.2% year-over-year increase. In addition, the company’s revenue is expected to increase 15.2% year-over-year to $1.89 billion in its fiscal year 2021.
KRO’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The stock has an A grade for Value, and a B grade for Stability and Sentiment.
USD Partners LP (USDP)
USDP in Houston, Tex., acquires, develops, and operates midstream infrastructure assets and logistics solutions for crude oil, biofuels, and other energy-related products in the United States and Canada. The company operates through two segments: Terminalling Services and Fleet Services.
On August 16, 2021, USDP announced an expansion of the downstream connectivity at its Stroud terminal. Jim Albertson, Senior Vice President, Commercial Development, said, “This expansion facilitates greater market access and enhances the Stroud terminal’s ability to increase its customer base and fee-generating commitments.”
USDP’s four-year average dividend yield is 16.62%, its current dividend translates to a 6.93% yield. Its annual dividend is $0.46. Also, it paid a $0.12 per share quarterly dividend on August 13.
USDP’s total revenues increased 22.2% year-over-year to $33.52 million for the second quarter, ended June 30, 2021. The company’s operating income grew 83% year-over-year to $9.15 million, while its net income increased 466.3% year-over-year to $6.72 million. Also, its adjusted EBITDA increased 27.7% year-over-year to $16.32 million.
For its fiscal year 2022, analysts expect USDP’s EPS and revenue to increase 5.2% and 4.7% year-over-year to $1.01 and $134.53 million, respectively. The stock has gained 112% in price over the past year to close Friday’s trading session at $6.70.
USDP’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Quality, and a B grade for Momentum, Value, Stability, and Sentiment.
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GSK shares fell $0.01 (-0.03%) in after-hours trading Monday. Year-to-date, GSK has gained 9.66%, versus a 20.78% 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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