Despite the Fed’s consecutive rate hikes and high prices, U.S. retail sales increased marginally month-over-month in October 2022. As the economy shows resilience, experts hope that the U.S. might be able to avoid a downturn.
Moreover, according to Goldman Sachs Research, the U.S. stands reasonable chances to achieve a ‘soft landing’ and avoid recession in 2023.
Also, Fifth Third Bank (FITB) Chief Investment Strategist Jeffrey Korzenik said, “It’s hard to imagine a deep recession when you don’t have a problem in the financial sector, when you don’t have high indebtedness levels and when you don’t have massive dislocations in the economy.”
While there’s a surge in optimism, caution remains. So, investors looking for early retirement could consider buying quality dividend-paying stocks, Microsoft Corporation (MSFT) and Cigna Corporation (CI), for a stable income stream.
Microsoft Corporation (MSFT)
MSFT develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On November 16, 2022, MSFT and Lockheed Martin Corporation (LMT) announced the expansion of their strategic relationship to power the next generation of technology for the Department of Defense. This agreement should be beneficial for the companies.
Also, on November 14, 2022, MSFT launched the MSFT Supply Chain Platform. Charles Lamanna, corporate vice president of MSFT Business Applications and Platform, said, “The Microsoft Supply Chain Platform and Supply Chain Center enable organizations to make the most of their existing investments to gain insights and act quickly.”
MSFT has paid dividends for 19 consecutive years. Over the last three years, MSFT’s dividend payouts have grown at a 10.4% CAGR. While MSFT’s four-year average dividend yield is 1.06%, its current dividend translates to a 1.13% yield.
For its fiscal 2023 first quarter ended September 30, 2022, MSFT’s total revenue came in at $50.12 billion, up 10.6% year-over-year. Its service and other revenue came in at $34.38 billion, up 19.9% year-over-year. Also, its operating income came in at $21.52 billion, up 6.3% year-over-year.
Analysts expect MSFT’s revenue to increase 7.2% year-over-year to $212.46 billion in 2023. Its EPS is expected to increase 3.7% year-over-year to $9.55 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past month, the stock has gained marginally to close the last trading session at $241.22.
MSFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MSFT has a B grade for Stability and Quality. Within the Software – Business industry, it is ranked #9 out of 53 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for MSFT.
Cigna Corporation (CI)
CI provides insurance and related products and services in the United States. Its segments are Evernorth and Cigna Healthcare.
On November 3, 2022, David M. Cordani, chairman and CEO, said, “We’re leveraging capabilities across Evernorth and Cigna Healthcare as we innovate to further improve affordability, guide patients to the most effective treatments and improve the vitality of the customers we serve.”
CI has paid dividends for 32 consecutive years. Over the last three years, CI’s dividend payouts have grown at a 377.7% CAGR. While CI’s four-year average dividend yield is 0.57%, its current dividend translates to a 1.40% yield.
CI’s total revenues came in at $45.28 billion for the third quarter that ended September 30, 2022, up 2.2% year-over-year. Its Pharmacy revenues came in at $32.76 billion, up 5.6% year-over-year. Moreover, its adjusted EPS came in at $6.04, up 5.4% year-over-year.
CI’s revenue is expected to be $180.55 billion in 2022, representing a 3.7% year-over-year rise. Its EPS is expected to increase 13.1% year-over-year to $23.16 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 45.9% to close the last trading session at $319.21.
It’s no surprise that CI has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Value, Sentiment, and Quality.
CI is ranked #5 out of 11 stocks in the A-rated Medical – Health Insurance industry. Click here to see CI’s Growth, Momentum, and Stability ratings.
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
MSFT shares were trading at $241.79 per share on Monday morning, up $0.57 (+0.24%). Year-to-date, MSFT has declined -27.43%, versus a -15.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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