The central bank announced its fourth straight interest rate hike of three-quarters of a percentage point to bring inflation under control. The Federal Reserve, along with central banks around the world, has aggressively hiked interest rates in recent times to tame sky-high inflation, raising the odds of a global recession.

While the recession debate has raged over the past few months, around 90% of CEOs say they now believe a downturn is coming, according to a survey of 400 U.S. CEOs. Moreover, top economists and Street gurus have relentlessly warned that a recession is on the way.

The Fed’s aggressive rate hikes and the recession fears have led to a significant selloff this year, and the bear market seems not yet over. Given this backdrop, fundamentally strong stocks Pfizer Inc. (PFE) and Kroger Co. (KR), which pay a handsome dividend, could help you beat the bear market blues.

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, as well as disease control and prevention centers.  

Also, 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. Its annual dividend of $1.60 yields 3.40% on current prices. The company’s dividend payouts have increased at a 5.5% CAGR over the past three years and a 5.7% CAGR over the past five years. The company has a record of 12 years of consecutive dividend growth. 

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 net income attributable to Pfizer Inc. common shareholders rose 39.7% year-over-year to $10.17 billion, while its non-GAAP EPS grew 40.2% year-over-year to $1.78.

Streets expect PFE’s EPS for the current fiscal year ending December 2022 to be $6.44, indicating a 45.7% improvement year-over-year. The company’s revenue is likely to increase 23% year-over-year to $99.96 billion in the same quarter. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.  

The stock has gained 11.3% over the past month to close its last trading session at $47.09. 

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 and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #5 out of 163 stocks. Click here to see additional POWR Ratings for Momentum, Stability, and Sentiment for PFE.

Kroger Co. (KR)

KR operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses.

On October 18, KR announced the official opening of its newest Customer Fulfillment Center in Romulus, Michigan, which will leverage advanced robotics technology and creative solutions to redefine the customer experience for customers in the greater Detroit area. The expansion should help drive up the company’s revenue stream over time.

On October 14, KR and Albertsons Companies (ACI) announced that they have entered into a definitive agreement under which the companies will merge, aiming to expand the customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience.

The company expects this collaboration to drive profitable growth and sustainable value for all its shareholders.

On September 15, KR declared a quarterly dividend of 26 cents per share to be paid to shareholders on December 1, 2022. Its annual dividend of $1.04 yields 2.22% on current prices. The company’s dividend payouts have increased at a 15.3% CAGR over the past three years and a 12.9% CAGR over the past five years. The company has 15 years of consecutive dividend growth.

KR’s sales increased 9.3% year-over-year to $34.64 billion in the fiscal second quarter ending August 13. Its operating profit increased 13.7% year-over-year to $954 million. The company’s adjusted EBITDA grew 10.9% from the year-ago value to $7.63 billion, while its adjusted EPS improved 12.5% year-over-year to $0.90.

Street expects KR’s revenue for the fiscal year ending January 2023 to come in at $148.32 billion, indicating an increase of 7.6% year-over-year. The company’s EPS is expected to grow 10.9% year-over-year to $4.08 in the same year. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.

It has gained 10.7% over the past year to close the last trading session at $46.85.

KR has an overall rating of A, which translates to Strong Buy in our proprietary rating system. It has a B grade in Growth, Value, and Quality. KR is ranked #7 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.

In addition to the POWR Ratings grades just highlighted, you can see KR ratings for Sentiment, Momentum, and Stability here.

PFE shares were trading at $47.20 per share on Tuesday afternoon, up $0.11 (+0.23%). Year-to-date, PFE has declined -17.47%, versus a -19.18% 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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