The stock market, this year, has witnessed massive selloffs due to geopolitical turmoil, sky-high inflation, and aggressive interest rate hikes. The situation is not likely to improve anytime soon, given a recession is anticipated to hit in 2023.

The stock market has been volatile lately as traders weighed the possibility of an economic slowdown and the likelihood of a longer-than-expected hiking cycle from the Fed. Even though the Fed indicated a slower rate hike, the job market’s resiliency could prompt the Fed to continue its rate hikes.

Against this backdrop, investors have been trying to safeguard their portfolios against uncertainties and ensure consistent returns. Over the past month, the SPDR S&P Dividend ETF’s (SDY) 4.4% returns versus the S&P 500’s 2.8% gains substantiate investors’ interest in dividend stocks.

Therefore, fundamentally strong high-yield dividend stocks Pfizer Inc. (PFE), BHP Group Limited (BHP), and Caledonia Mining Corporation Plc (CMCL) with significant upside potential could be ideal buys now.

Pfizer Inc. (PFE)

PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, and disease control and prevention centers.

On November 3, PFE announced that its investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma (RRMM). This marks PFE’s twelfth FDA Breakthrough Therapy Designation in Oncology.

On October 20, PFE and Erasca, Inc. (ERAS) announced a clinical trial collaboration and supply agreement for the CDK4/6 inhibitor palbociclib. This agreement is expected to fund a clinical proof-of-concept study of ERAS-007, an oral ERK1/2 inhibitor, in combination with palbociclib for treating patients with KRAS- and NRAS-mutant colorectal cancer and KRAS-mutant pancreatic ductal adenocarcinoma.

This agreement should bolster its capabilities and be beneficial amid the rising cancer cases worldwide.

On October 5, PFE announced that it had completed the acquisition of Global Blood Therapeutics, Inc. (GBT), a biopharmaceutical company that deals with sickle cell disease (SCD). The acquisition reinforces Pfizer’s commitment to SCD, building on a 30-year legacy in the rare hematology space.

On September 22, PFE declared a quarterly dividend of $0.40 per share on its common stock, which was payable to shareholders on December 5. PFE has raised its dividends for 12 consecutive years. It pays a $1.60 per share dividend annually, which translates to a 3.1% yield on the current price.

PFE’s dividend payments have grown at a CAGR of 5.5% over the past three years. Its four-year average dividend yield is 3.6%.

During the fiscal third quarter ended September 2022, PFE’s income from continuing operations improved 5.8% year-over-year to $8.65 billion. Its non-GAAP adjusted net income attributable to Pfizer Inc. common shareholders rose 39.7% year-over-year to $10.17 billion, while its adjusted EPS grew 40.2% year-over-year to $1.78.

Street expects PFE’s EPS for the current fiscal year ending December 2022 to be $6.47, indicating a 46.5% improvement year-over-year. The company’s revenue is likely to increase 23.3% year-over-year to $100.23 billion in the same year. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.  

The stock has gained 10% over the past three months to close its last trading session at $51.78. Moreover, it has gained 3.1% intraday.

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

PFE is rated an A in Value and a B in Growth, Sentiment, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #2 out of 160 stocks.

Click here to see additional POWR Ratings for Momentum and Stability for PFE.

BHP Group Limited (BHP)

Headquartered in Melbourne, Australia, BHP operates globally as a resources company. The company operates through 3 segments: Copper; Iron Ore; and Coal segments. Along with mining, it provides other services such as towing, freight, marketing and trading, marketing support, finance, administrative, and other services.

BHP has plans to take over OZ Minerals Ltd. and recently raised its offer to $6.34 billion as it seeks to produce more copper and nickel needed for electric vehicles, wind turbines, and solar farms. A completed deal would represent BHP’s largest acquisition since 2011, when it bought Petrohawk Energy Corp.

On November 03, BHP signed a renewable Power Purchase Agreement (PPA) with Neoen, which is expected to meet half of Olympic Dam’s electricity needs from FY2026, simultaneously allowing Olympic Dam to record a net zero emission position for the contracted volume of supply.

BHP Olympic Dam Asset President Jennifer Purdie said, “This agreement will support BHP on its decarbonization journey, and provide new firmed renewable energy and increased stability to the South Australian grid.”

On August 16, 2022, BHP Board declared a final dividend of US$1.75 per share, payable on September 22. Its annual dividend of $7.00 yields 11% on the current share price. It has a four-year average yield of 7.8%.

The company’s dividend payouts have increased at 37.6% CAGR over the past three years and a 33.1% CAGR over the past five years. The company grew its dividend payments for two consecutive years.

BHP’s total revenue came in at $65.10 billion for the fiscal year ended June 30, 2022, up 14.4% year-over-year. Underlying attributable profit and underlying basic earnings per ordinary share came in at $23.82 billion and $4.71, an increase of 39.5% and 39.4%, respectively.

For the fiscal year ending June 2023, Street expects BHP’s EPS to increase 6.6% year-over-year to $5.01. Its revenue is expected to come in at $53.25 billion for the same period.

Over the past three months, the stock has gained 26% to close the last trading session at $63.47. It has gained 19% over the past month.

BHP’s overall B rating equates to a Buy in our proprietary rating system. The stock has a B grade for Value and Quality. Among the 36 stocks in the B-rated Industrial – Metals industry, it is ranked #1.

Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for BHP.

Caledonia Mining Corporation Plc (CMCL)

Headquartered in Saint Helier, Jersey, CMCL is a gold mine operator that explores and produces gold and other precious metals. It operates through three segments: Corporate; Zimbabwe; South Africa, and Zambia.

On November 2, 2022, CMCL announced the acquisition of Motapa Mining Company U.K. Limited, the parent company of a Zimbabwe subsidiary that owns a registered mining lease on the Motapa gold exploration property in Southern Zimbabwe.

Mark Learmonth, the CEO, said, “We look forward to developing an exploration program for Motapa as we target a large-scale gold belt surrounding the Bilboes project.”

CMCL paid a quarterly dividend of 14 cents per share in October 2022. Its annual dividend of $0.56 yields 4.8% on prevailing prices. The company’s dividend payouts have increased at a 17.7% CAGR over the past three years and 52.5% CAGR over the past five years. CMCL’s four-year average dividend yield is 3.8%.

CMCL’s revenue came in at $35.84 million for the third quarter that ended September 30, 2022, up 7% year-over-year. Net cash from operating activities increased 25.5% year-over-year to $8.92 million for the same quarter. Its total comprehensive income for the period came in at $9.50 million, up 18.8% year-over-year, while its adjusted earnings per share came in at 60.7 cents.

Analysts expect CMCL’s revenue to increase 19.1% year-over-year to $144.51 million in December 2022. Its EPS is estimated to grow 9.1% year-over-year to $2.47 in the same year.

Over the past three months, the stock has gained 22.8% to close the last trading session at $11.67. It gained 2.4% intraday.

This promising outlook is reflected in CMCL’s POWR Ratings. CMCL has an overall A rating, equating to a Strong Buy in our rating system.

CMCL has an A grade for Value and Sentiment and a B for Stability. It is ranked first among 46 stocks in the Miners – Diversified industry.

Click here to access the additional POWR Ratings for CMCL (Growth, Momentum, and Quality).

PFE shares were trading at $51.89 per share on Friday afternoon, up $0.11 (+0.21%). Year-to-date, PFE has declined -9.27%, versus a -15.65% 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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