Although cooling inflation for the sixth consecutive time in December 2022 has raised investor optimism, the Fed officials’ hawkish comments signaling interest rate hikes throughout 2023 could keep the stock market under pressure.

Moreover, U.S. retail sales dropped 1.1% in December, and manufacturing output fell 1.3%, triggering recessionary fears. This indicates that consumers are losing steam, and business investments are declining, reflecting weaker economic growth.

Bob Michele, chief investment officer at JPMorgan Asset Management, said, “The impact of a year of very aggressive central bank tightening and quantitative tightening are starting to bite the economy and they’re biting hard.”

Amid such volatilities, investors could safeguard their portfolios and opt for dividend stocks that ensure consistent returns. Over the past three months, SPDR S&P Dividend ETF’s (SDY) 6.4% gains outpaced the S&P 500’s increase of 4.8%.

Therefore, quality stocks trading under $200, Johnson & Johnson (JNJ), Archer-Daniels-Midland Company (ADM), and Acuity Brands, Inc. (AYI) might be wise additions to your retirement portfolio now.

Johnson & Johnson (JNJ)

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through the broad segments of Consumer Health; Pharmaceuticals; and MedTech.

On December 22, 2022, JNJ announced that it had completed its acquisition of Abiomed, Inc. (ABMD), a heart, lung, and kidney support technologies company, for an enterprise value of approximately $16.60 billion. This acquisition is expected to broaden JNJ’s MedTech segment’s position as a cardiovascular innovator.

On January 3, 2023, JNJ declared a cash dividend for the first quarter of 2023 of $1.13 per share on its common stock, payable to shareholders on March 7, 2023. JNJ has raised dividends for 60 consecutive years.

JNJ pays a $4.52 per share dividend annually, which translates to a 2.68% yield on the current price level. Its four-year average dividend yield is 2.60%. Its dividend payouts have grown at a 5.9% CAGR over the past three years and a 6% CAGR over the past five years.

For the fiscal fourth quarter of 2022, JNJ’s reported sales stood at $23.71 billion.  Its non-GAAP adjusted net earnings rose 9.5% to $6.22 billion. The company’s non-GAAP adjusted net earnings per share increased 10.3% from its year-ago value to $2.35.

For the fiscal first quarter ending March 2023, the consensus EPS estimate came in at $2.52. Its revenue is expected to increase marginally year-over-year to $23.59 billion for the same quarter. Additionally, JNJ topped consensus EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained marginally over the past month to close its last trading session at $168.89.

JNJ’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

JNJ is rated a B in Value, Stability, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #9 out of 169 stocks.

Click here to see additional POWR Ratings for JNJ (Momentum, Growth, and Sentiment).

Archer-Daniels-Midland Company (ADM)

ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients worldwide. The company operates through three segments: Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition.

Recently, ADM’s board of directors declared a dividend of 45 cents per share on the company’s common stock, payable to shareholders on March 2, 2023. This is ADM’s 365th consecutive quarterly payment. The company has a record of 91 years of uninterrupted dividends.

ADM pays a $1.80 per share dividend annually, which translates to a 2.12% yield on the current price level. Its four-year average dividend yield is 2.72%. Its dividend payouts have grown at a 4.6% CAGR over the past three and five years.

On September 14, 2022, ADM and PepsiCo, Inc. (PEP) announced a 7.5-year strategic commercial agreement to collaborate on projects aiming to expand regenerative agriculture. The partnership is expected to reach up to 2 million acres by 2030. Moreover, reaching the partnership’s goals could eliminate 1.4 million metric tons of greenhouse gases. This should benefit ADM.

ADM’s trailing-12-month ROCE of 18.55% is 77.9% higher than the 10.43% industry average. Likewise, its trailing-12-month ROTA of 11.72% is 225.8% higher than the industry average of 3.60%.

For the fiscal fourth quarter that ended December 31, 2022, ADM’s revenues increased 13.6% year-over-year to $26.23 billion. Its adjusted net earnings increased 25.8% year-over-year to $1.07 billion. Additionally, its adjusted EPS came in at $1.93, representing a 28.7% increase from the prior-year quarter.

ADM’s revenue for the fiscal first quarter ending March 2023 is expected to increase 2.3% year-over-year to $24.20 billion. Street expects its EPS to come in at $1.89. It surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.

The stock has gained 7.6% over the past six months to close the last trading session at $84.90. It has gained marginally over the past five days.

ADM’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which translates to a Strong Buy in our proprietary rating system.

It has an A grade for Growth and a B for Sentiment and Quality. It is ranked #2 out of 28 stocks in the Agriculture industry.

Click here to see the additional ADM ratings for Value, Momentum, and Stability.

Acuity Brands, Inc. (AYI)

AYI provides lighting and building management solutions internationally. The company operates through two segments: Acuity Brands Lighting and Lighting Controls (ABL); and the Intelligent Spaces Group (ISG).

Recently, AYI’s board of directors declared a quarterly dividend of 13 cents per share, payable to shareholders on February 14, 2023. AYI pays a $0.52 per share dividend annually, which translates to a 0.29% yield on the current price level. Its four-year average dividend yield is 0.36%.

AYI’s trailing-12-month ROCE of 18.68% is 31.6% higher than the 14.19% industry average. Likewise, its trailing-12-month ROTA of 10.80% is 104.8% higher than the industry average of 5.28%.

For the fiscal first quarter that ended November 30, 2022, AYI’s net sales increased 7.8% year-over-year to $997.90 billion. The company’s non-GAAP adjusted EBITDA increased 4.1% year-over-year to $153 million.

Its non-GAAP adjusted net income increased 6.1% year-over-year to $107.50 million, while non-GAAP earnings per share for the same quarter increased 15.4% from the prior-year period to $3.29.

The consensus EPS estimate for the fiscal second quarter ending February 2023 of $2.73 represents a 6.1% improvement year-over-year. Analysts expect AYI’s revenue for the same quarter to increase 5.5% year-over-year to $958.98 million. The company surpassed EPS and revenue estimates in each of the four trailing quarters.

AYI has gained 4.5% over the past six months to close its last trading session at $182.11. Moreover, it has gained 9.5% over the past month.

It is no surprise that AYI has an overall A rating, which translates to a Strong Buy in our POWR Ratings system.

AYI is also rated an A for Quality and a B for Value. AYI is ranked first in the 60-stock Home Improvement & Goods industry.

To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for AYI, click here.

JNJ shares fell $0.23 (-0.14%) in premarket trading Friday. Year-to-date, JNJ has declined -4.55%, versus a 5.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors. More...

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