The Federal Reserve, along with central banks around the world, has aggressively hiked interest rates in recent months, trying to tame stubborn inflation. On top of it, the Fed is widely expected to deliver a fourth straight 75-basis point rate hike next month.
While the rate hikes are intended to cool down the prices, they also elevate the risk of a recession. Street gurus and top economists have relentlessly warned that a recession is on the way. They warned that unless inflation goes down, the U.S. economy and the stock market present a grim outlook.
Moreover, market volatility is rife, as evident from the CBOE Volatility Index’s (VIX) 81.1% year-to-date gains. The Fed’s attempt at a soft landing seems to be futile.
Amid this chaos, fundamentally strong and excellent dividend-paying stocks Pfizer Inc. (PFE), McKesson Corporation (MCK), Nutrien Ltd. (NTR), and Genie Energy Ltd. (GNE) might help generate a reliable income stream. We think these stocks could be great buy-and-hold options for the long term.
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.
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.
Moreover, on October 3, PFE announced the completion of its acquisition of Biohaven Pharmaceutical Holding Company Ltd, which makes NURTEC® ODT (rimegepant), an innovative migraine therapy approved for both acute treatment and prevention of episodic migraine in adults. This acquisition should bolster its capabilities and be beneficial amid the rising migraine cases worldwide.
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 3.71% on current prices. The company’s dividend payouts have increased at a 5.7% CAGR over the past three years and a 5.9% CAGR over the past five years. The company has a record of 11 years of consecutive dividend growth.
In the second quarter ended July 3, PFE’s revenue increased 46.8% year-over-year to $27.74 billion. Its income from continuing operations grew 69.6% from the year-ago value to $9.88 billion, while its adjusted income improved 93.5% year-over-year to $11.66 billion. The company’s adjusted earnings per common share increased 92.5% from its year-ago value to $2.04.
Streets expect PFE’s EPS for the fourth fiscal quarter ending December 2022 to be $1.35, indicating a 25.1% improvement year-over-year. The company’s revenue is likely to increase 4.2% year-over-year to $24.84 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 marginally over the past five days to close its last trading session at $43.11.
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 Quality. Within the Medical – Pharmaceuticals industry, it is ranked #11 out of 161 stocks.
Click here to see additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for PFE.
McKesson Corporation (MCK)
MCK is an international healthcare services provider. It operates through four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (RxTS).
On September 29, MCK announced its agreement to extend its long-standing partnership with CVS Health Corporation (CVS) to distribute pharmaceuticals to mail-order and specialty pharmacies, retail pharmacies, and distribution centers through June 2027. This should continue to be beneficial for the company.
On September 19, MCK signed a definitive agreement to acquire Rx Savings Solutions, a prescription price transparency and benefits insight company offering affordable and adherence solutions to health plans and employers for $875 million. MCK expects to use the combined medication access, affordability, and adherence services as a foundation to build new outcomes management programs for biopharma.
On July 25, MCK declared a regular dividend of $0.54 per share of common stock, payable to shareholders on October 3, 2022. Its annual dividend of $2.16 yields 0.60% on current prices. The company’s dividend payouts have increased at a 7.3% CAGR over the past three years and a 10.6% CAGR over the past five years. The company has a record of 14 years of consecutive dividend growth.
In the fiscal first quarter ended June 30, 2022, MCK’s total revenues increased 7.2% year-over-year to $67.15 billion. Its net income attributable to MCK increased 58% from the year-ago value to $768 million. Additionally, the company reported an adjusted EPS of $5.83 for the quarter, registering an increase of 4.9% year-over-year.
The consensus revenue estimate of $67.96 billion for the fourth fiscal quarter ending March indicates an improvement of 2.8% year-over-year. The consensus EPS estimate of $6.37 represents a 9.2% increase from the prior-year quarter. Additionally, MCK has topped consensus EPS estimates in three out of the trailing four quarters, which is impressive.
The stock has gained 78% over the past year to close its last trading session at $360.66. It has gained 43.5% year-to-date.
It is no surprise that MCK has an overall rating of A, which translates to Strong Buy in our proprietary rating system. It is rated an A in Growth and a B in Value, Stability, and Sentiment. Within the Medical – Services industry, it is ranked #1 out of 78 stocks.
To see additional POWR Ratings for Momentum and Quality for MCK, click here.
Nutrien Ltd. (NTR)
NTR is the largest crop inputs, services, and solutions provider. It offers potash, nitrogen, phosphate, sulfate products, and financial solutions. Also, it distributes crop nutrients, crop protection products, seeds, and merchandise products through 2,000 retail locations in the U.S., Canada, Australia, and South America. The company is headquartered in Saskatoon, Canada.
On July 20, 2022, NTR announced that it had entered into an agreement to acquire Brazilian company Casa do Adubo S.A. The acquisition supports NTR’s Retail growth strategy, and the company expects this will help it expand its footprint in Brazil from 5 states to 13.
On August 4, NTR declared a quarterly dividend of $0.48 per share, payable on October 14, 2022. Its annual dividend of $1.92 yields 2.35% on current prices. The company’s dividend payouts have increased at a 3% CAGR over the past three years. The company has a 3-year record of consecutive dividend growth.
NTR’s sales came in at $14.51 billion for the second quarter ended June 30, 2022, up 48.6% year-over-year. Its adjusted EBITDA rose 125.4% from its previous-year quarter to $4.99 billion. The company’s net earnings increased 223.5% year-over-year to $3.60 billion, while its EPS increased 235.6% year-over-year to $6.51.
Analysts expect NTR’s revenue to increase 47.6% year-over-year to $39.63 billion in the current year ending December. Its EPS is estimated to increase 167.2% year-over-year to $16.65 in 2022. It surpassed EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 54.4% to close the last trading session at $81.70.
The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. NTR has a B grade in Growth, Value, and Quality. Within the Agriculture industry, it is ranked #3 out of 30 stocks.
Beyond what we’ve stated above, we have also given NTR grades for Momentum, Stability, and Sentiment. Get all NTR ratings here.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. It operates in three segments, Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On September 20, GNE announced that it currently owns site rights to solar generation projects with an aggregate of 64 MW in New York and Pennsylvania. The company stands to benefit through the incentives from the Inflation Reduction Act targeted at solar power generation in the earlier stages. Over the long term, this project is expected to garner significant returns for the company.
On August 8, GNE’s Board of Directors declared a dividend of $0.075 per share of Class A and Class B common stock, payable on or about August 26. Its annual dividend of $0.30 yields 3.30% on current prices.
GNE’s gross profit increased 218.2% year-over-year to $67.47 million in the second quarter ended June 30. Its operating income grew 968.7% from the year-ago value to $48.48 million, while its net income attributable to common stockholders improved 578.3% year-over-year to $33.90 million. The company’s net earnings per common share increased 584.2% from its year-ago value to $1.30.
Over the past year, GNE’s stock has gained 52.2% to close its last trading session at $8.89. It has gained 59.6% year-to-date.
This promising prospect is reflected in GNE’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. GNE has an A grade for Value and a B for Momentum, Sentiment, and Quality. It is ranked #2 of 66 stocks in the Utilities – Domestic industry.
In addition to the POWR Ratings grades just highlighted, you can see GNE ratings for Growth and Stability.
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PFE shares were trading at $43.35 per share on Thursday afternoon, up $0.24 (+0.56%). Year-to-date, PFE has declined -24.85%, versus a -21.65% 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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