Amid inflation wreaking havoc across consumer markets, another 75 bps Federal rate hike is basically a certainty, and as such a consequent economic slowdown is expected to follow. The New York Fed’s model has shown an 80% probability of recession and some of the largest banks in the world have echoed this sentiment.
Moreover, the Atlanta Fed’s GDPNow model estimated a GDP decline in the second quarter, which coupled with the negative growth of the first quarter, would mean we are technically in a recession. Given the grim outlook, investors seem to increasingly opt for dividend investing to safeguard their portfolios, as is evident from the SPDR S&P Dividend ETF’s (SDY) 4.4% gains over the past month.
In addition, according to the new CNBC Delivering Alpha investor survey, 42% of the participants preferred stocks paying high dividends, given their assurance of a stable income generation. Furthermore, Q2 2022 U.S. common dividend increases came in at $19.30 billion, up 25.1% year-over-year.
Dividend payouts are projected to increase throughout 2022 and post a record payment. Hence, we think it could be wise to invest in quality dividend stocks Nucor Corporation (NUE), The Procter & Gamble Company (PG), and AbbVie Inc. (ABBV) in the second half of this year.
Nucor Corporation (NUE)
NUE manufactures and sells steel and steel products with operating facilities in the United States, Canada, and Mexico. Its segments are Steel Mills; Steel Products; and Raw Materials. NUE is North America’s largest recycler.
On June 24, 2022, NUE completed its acquisition of C.H.I. Overhead Doors, a leading overhead doors manufacturer, from KKR & Co. Inc. (KKR) for $3 billion. This acquisition could extend both companies’ consumer base and bring other mutual benefits.
Also, on June 7, 2022, NUE announced that it had agreed to acquire Summit Utility Structures LLC and Sovereign Steel Manufacturing LLC, producers of metal poles and other steel structures. The company intends to establish a nationwide footprint in North America through these acquisitions.
NUE has paid dividends for 49 consecutive years. Over the last three years, NUE’s dividend payouts have grown at a 6.4% CAGR. While NUE’s four-year average dividend yield is 2.57%, its current dividend translates to a 1.67% yield.
For its second quarter ended July 2, 2022, NUE’s net sales increased 34.2% year-over-year to $11.79 billion. Its net earnings came in at $2.56 billion, up 70% year-over-year, while its EPS came in at $9.67, up 91.9% year-over-year.
Analysts expect NUE’s revenue to increase 16% year-over-year to $42.31 billion in 2022. Its EPS is estimated to grow 40.4% per annum for the next five years. It surpassed EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 27.7% to close the last trading session at $119.86.
NUE’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.
NUE has a B grade for Growth and Quality. Within the A-rated Steel industry, it is ranked #16 out of 32 stocks. Click here for the additional POWR Rating for Value, Momentum, Stability, and Sentiment for NUE.
The Procter & Gamble Company (PG)
PG provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
On July 20, 2022, PG and Shopee, the leading e-commerce platform in Southeast Asia and Taiwan, launched PG’s Regional Super Brand Day on Shopee. This partnership offers customers an extraordinary online shopping experience, clubbed with sheer convenience.
Moreover, on June 8, 2022, PG and Microsoft Corp. (MSFT) announced their collaboration, whereby MSFT Cloud would assist the future of digital manufacturing at PG. This is expected to make the company’s manufacturing smarter.
PG has paid dividends for 66 consecutive years. Over the last three years, PG’s dividend payouts have grown at a 6.8% CAGR. While PG’s four-year average dividend yield is 2.54%, its current dividend translates to a 2.55% yield.
PG’s net sales came in at $19.38 billion for its third quarter ended March 31, 2022, up 7% year-over-year. Its net earnings came in at $3.35 billion, up 2.6% year-over-year, while its EPS came in at $1.33, up 5.6% year-over-year.
For 2022, analysts expect PG’s revenue to increase 5.1% year-over-year to $80.02 billion. Its EPS is estimated to grow 4.6% per annum for the next five years. Moreover, it surpassed EPS estimates in each of the four trailing quarters. Over the past year, the stock has gained 3.8% to close the last trading session at $143.02.
PG’s overall B rating equates to a Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the Consumer Goods industry, it is ranked #3 out of 60 stocks. Click here for the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for PG.
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company functions across several key therapeutic areas like immunology, oncology, neuroscience, eye care, virology, and gastroenterology.
On July 20, 2022, ABBV and iSTAR Medical SA officially partnered to develop and commercialize iSTAR Medical’s MINIject® device, a minimally invasive glaucoma surgical device. The strategic alliance could be a milestone achievement in glaucoma treatment.
On April 29, 2022, Richard A. Gonzalez, chairman, and CEO, said, “Our momentum combined with ramping contributions from new products and indications will drive accelerating revenue and EPS growth through the rest of the year.”
ABBV has paid dividends for nine consecutive years. Over the last three years, ABBV’s dividend payouts have grown at a 9.9% CAGR. ABBV’s four-year average dividend yield is 4.63%, and its current dividend translates to a 3.80% yield.
ABBV’s net revenues for the first quarter ended March 31, 2022, came in at $13.54 billion, up 4.1% year-over-year. Its net earnings came in at $4.49 billion, up 26.4% year-over-year. Moreover, its adjusted EPS came in at $3.16, up 9.3% year-over-year.
Analysts expect ABBV’s revenue to increase 6.2% year-over-year to $59.61 billion in 2022. Its EPS is expected to increase 9.8% year-over-year to $13.94 in 2022. It surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 26.3% to close the last trading session at $148.47.
It’s no surprise that ABBV has an overall A rating, equating to a Strong Buy in our proprietary POWR Ratings system. In addition, it has an A grade for Quality and a B for Growth and Value.
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NUE shares were trading at $121.74 per share on Monday morning, up $1.88 (+1.57%). Year-to-date, NUE has gained 7.50%, versus a -16.12% 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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