Despite a drop in gas prices, August’s consumer price index increased 0.1% sequentially and 8.3% over the past year. Moreover, the inflation numbers indicate a broad-based problem, as inflation excluding food and energy or the core inflation rose 0.6% for the month, pulling year-over-year cost-of-living increases up 6.3%.
The Federal Reserve is expected to hit back with another massive interest rate hike next week. “The Fed is all but sure to hike rates aggressively next week, likely by 75 basis points while pushing back strongly against talk of a near-term pause in the tightening cycle,” said Sal Guatieri, a senior economist at BMO Capital Markets.
Moreover, 72% of economists polled by the National Association of Business Economics expect the next U.S. recession to begin by the middle of next year.
Given the uncertainties, we believe the fundamentally strong and stable dividend-paying stocks Johnson & Johnson (JNJ), The Coca-Cola Company (KO), and AbbVie Inc. (ABBV) might be ideal investments for seniors.
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 September 15, JNJ announced that its Board of Directors had authorized the repurchase of up to $5 billion of its common stock. Joaquin Duato, Chief Executive Officer, said, “With our strong cash flow and lowest level of net debt in five years, we have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns and drive long-term growth.”
On July 18, JNJ declared a quarterly dividend of $1.13 per common share, which was payable to shareholders on September 6. Its annual dividend of $4.52 yields 2.75% on prevailing prices. The company’s dividend payouts have increased at a 5.8% CAGR over the past three years and a 6% CAGR over the past five years. The company has a record of 59 years of consecutive dividend growth.
JNJ’s gross profit increased 2.4% year-over-year to $16.10 billion in the second quarter that ended June 30. Its sale to customers grew 3% from the year-ago value to $24.02 billion, while its adjusted net earnings improved 4.3% year-over-year to $6.91 billion. The company’s adjusted net earnings per common share increased 4.4% from its year-ago value to $2.59.
The consensus EPS estimate of $10.08 for the fiscal year ending December 2022 indicates a 2.8% improvement year-over-year. The consensus revenue is expected to increase 1.9% year-over-year to $95.53 billion for the same year. Additionally, JNJ has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally intraday to close its last trading session at $165.08.
JNJ’s POWR Ratings reflect this promising outlook. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JNJ is rated an A in Stability and a B in Growth, Value, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #1 of 164 stocks.
Beyond what we’ve stated above, we have also given grades for Momentum and Sentiment for JNJ. Get all JNJ ratings here.
The Coca-Cola Company (KO)
KO is a popular beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, and energy drinks.
In June, KO and Brown Forman Corporation (BF.A, BF.B) announced a global relationship to debut the iconic Jack & Coke cocktail as a branded, ready-to-drink pre-mixed cocktail option. The new product might bolster the company’s revenue stream.
In July, KO declared a quarterly dividend of 44 cents per common share, payable to shareholders on October 3. Its annual dividend of $1.76 yields 2.90% on prevailing prices. The company’s dividend payouts have increased at a 3.1% CAGR over the past three years and a 3.6% CAGR over the past five years. The company has a record of 59 years of consecutive dividend growth.
KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion in the second quarter that ended July 1. Its non-GAAP gross profit grew 7.2% from the year-ago value to $6.67 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. The company’s non-GAAP net earnings per common share increased 2.9% from its year-ago value to $0.70.
The consensus EPS estimate of $2.46 for the fiscal year ending December 2022 indicates a 6.1% improvement year-over-year. The consensus revenue is expected to increase 8.9% from the prior year to $42.11 billion for the same year. Additionally, KO has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 6.5% over the past year to close its last trading session at $59.53.
It’s no surprise that KO has an overall rating of B, which translates to Buy in our proprietary rating system. KO is rated a B in Stability, Sentiment, and Quality.
AbbVie Inc. (ABBV)
ABBV is a healthcare company that discovers, develops, manufactures, and sells pharmaceuticals worldwide with a focus and capabilities to address health challenges.
On August 31, ABBV company Allergan Aesthetics announced the launch of SkinMedica® Firm & Tone Lotion for Body, the professional-grade skincare line formulated to prevent and address visible signs of body skin aging. This should help the company boost its revenues.
On August 24, ABBV announced that the U.S. Food and Drug Administration (FDA) had approved the use of IMBRUVICA® (ibrutinib) to treat pediatric patients one year and older with chronic graft versus host disease (cGVHD). This is expected to bolster the company’s portfolio.
On September 9, ABBV declared a quarterly dividend of $1.41 per common share, payable to shareholders on November 15. Its annual dividend of $5.64 yields 4.04% on prevailing prices. The company’s dividend payouts have increased at a 9.9% CAGR over the past three years and a 17.5% CAGR over the past five years. The company has a record of eight years of consecutive dividend growth.
For the second quarter of 2022 ended June 30, ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion. Its adjusted earnings and adjusted earnings per share came in at $6.01 billion and $3.37, up 10.7% and 11.2% from the prior-year period.
Street EPS estimate for the third fiscal quarter (ending September 2022) of $3.60 reflects a rise of 8.1% year-over-year. Likewise, Street revenue estimate for the same quarter of $14.99 billion indicates an improvement of 4.5% from the prior-year quarter. Additionally, ABBV has topped consensus EPS estimates in each of the trailing four quarters.
Over the past year, ABBV’s stock has gained 32.2% to close its last trading session at $142.51. It has gained 2.1% intraday.
This promising prospect is reflected in ABBV’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. ABBV has an A grade for Quality and a B grade for Growth, Value, and Sentiment.
ABBV is ranked #4 in the Medical – Pharmaceuticals industry. Click here to see the additional POWR Ratings for ABBV (Momentum and Stability).
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JNJ shares were trading at $166.87 per share on Friday afternoon, up $1.79 (+1.08%). Year-to-date, JNJ has declined -0.53%, versus a -18.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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