Due to the Russia-Ukraine war and concerns surrounding 40-year high inflation rates, the major equity indexes were pushed into the correction territory earlier this year. The Fed approved an interest rate hike of 25 basis points two weeks ago to combat skyrocketing inflation rates and indicated that it planned six more hikes this year. Following the Fed’s aggressive monetary policy plan, the stock market is projected to remain volatile in the near term.
During a market downturn, investors are drawn toward high-yield dividend stocks. Dividend stocks are known to withstand market fluctuations and help investors’ portfolios weather volatility. To ensure a steady income stream, quality dividend stocks should be the top picks for investors amid uncertain market conditions. Investors’ interest in dividend stocks is evident in iShares Core High Dividend ETF’s (HDV) 12% gains over the past six months.
Given these factors, we think it advisable to invest in high-yield dividend stocks Banco Santander, S.A. (SAN), Ultrapar Participações S.A. (UGP), and Turkcell Iletisim Hizmetleri A.S. (TKC) that offer steady income irrespective of the market conditions.
Banco Santander, S.A. (SAN)
Headquartered in Madrid, Spain, SAN provides retail and commercial banking products worldwide. The company offers demand and time deposits, current and savings accounts, consumer finance, mortgages, cash management, trade and working capital solutions, insurance products, wealth management, and private banking services. It serves individuals, small and medium-sized enterprises, and large companies.
This January, Santander Holdings USA, Inc. (SHUSA), a wholly-owned subsidiary of SAN, announced that the Federal Reserve had approved the acquisition of all outstanding shares of common stock of Santander Consumer USA Holdings Inc. (SC) for $41.50 per share, which are not already owned by SHUSA.
In its fiscal 2021 fourth quarter, ended Dec. 31, 2021, SAN’s total revenue increased 7.1% year-over-year to €11.78 billion ($12.94 billion). The company’s net operating income improved 6.7% from the prior-year period to €6.14 billion ($6.74 billion). SAN’s underlying profit before tax grew 44% year-over-year to €3.83 billion ($4.21 billion). The company’s attributable profit rose 721.3% year-over-year to €2.28 billion ($2.50 billion).
SAN pays $0.08 as dividends annually, yielding 1.1% at its current share price.
The $52.95 billion consensus revenue estimate for its fiscal year 2022 ending Dec. 31, 2022, represents 3.6% year-over-year growth from 2021. The $0.44 consensus EPS estimate for its fiscal 2022 indicates an 18.9% year-over-year rise from the last year.
Shares of SAN increased marginally over the past three months. It closed Friday’s trading session at $3.39.
SAN’s POWR Ratings reflect this promising outlook. The stock has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SAN has a B grade for Growth, Stability, and Momentum. Within the B-rated Foreign Banks industry, it is ranked #3 of 96 stocks.
To see additional POWR Ratings (Quality, Value, and Sentiment) for SAN, click here.
Ultrapar Participações S.A. (UGP)
Headquartered in Sao Paulo, Brazil, UGP engages in gas distribution, fuel distribution, chemicals, storage, and drugstores businesses in Brazil, Mexico, Uruguay, Venezuela, U.S., Canada, Europe, and internationally. The company operates through more than 7,107 Ipiranga service stations, 1,804 AmPm convenience stores, 1,171 Jet Oil franchises, 405 Extrafarma drugstores, and three distribution centers.
Last December, UGP’s ultracargo planned to expand and diversify its operations with forthcoming auctions. UGP’s logistics company already operates liquid terminals in seven ports in Brazil. “We are studying some opportunities [of diversification]. Maybe they will materialize in 2022. Everything will depend on the risk/reward ratio. But it is certainly a path that the company will begin to follow,” said CEO Décio Amaral of UGP.
UGP’s net revenues increased 48.2% year-over-year to R$34.41 billion ($7.3 billion) in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. UGP’s adjusted EBITDA grew 25.1% from its year-ago value to $1.19 billion ($250.87 million). Its recurring EBITDA rose 32.3% year-over-year to R$1.14 billion ($240.33 million). And the company’s cash flow from operations improved 38.6% year-over-year to R$704 million ($148.42 million).
UGP pays $0.07 as dividends annually, yielding 2.2% at its current share price.
Analysts expect UGP’s revenue for its fiscal year 2022 first quarter, ending March 31, 2022, to come in at $6.88 billion, representing a 57.3% rise year-over-year. The Street expects the company’s EPS for the current quarter to come in at $0.05, representing a 150% increase year-over-year.
The stock gained 18.2% in price year-to-date and 20.5% over the past three months. It closed Friday’s trading session at $3.12.
Under the POWR Ratings, UGP has a B grade for Sentiment and Value. It is ranked #26 of 43 stocks in the A-rated Foreign Oil & Gas industry.
Click here to see UGP ratings for Momentum, Stability, Growth, and Quality.
Turkcell Iletisim Hizmetleri A.S. (TKC)
TKC offers digital services in Turkey, Ukraine, Belarus, Northern Cyprus, Germany, and the Netherlands. It is headquartered in Istanbul, Turkey. The company operates through three segments: Turkcell Turkey; Turkcell International; and Techfin. TKC provides contact services and digital business services. In addition, it offers hardware, software, and financing services.
On July 7, 2021, TKC signed a share transfer agreement to acquire Boyut Grup Enerji, which owns the İzmir Karadağ Wind Power Plant. “In line with our sustainability approach, we continue to lead investments in renewable energy and target to become a company meeting its electricity need from eco-friendly resources,” stated CEO Murat Erkan of TKC. Through this acquisition, TKC is expected to promote sustainability and boost revenue streams.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, TKC’s revenue increased 29.5% year-over-year to TRY10.19 billion ($685.05 million). The company’s EBITDA grew 29.9% year-over-year to TRY4.21 billion ($283.03 million). TKC’s EBIT increased 32.8% from its year-ago value to TRY2.14 billion ($143.97 million). TKC’s net income grew 6.3% from the prior-year period to TRY1.38 billion ($92.77 million).
TKC pays $0.45 as dividends annually, yielding 5.5% at the current price.
The $3.17 billion consensus revenue estimate for its fiscal year 2022 ending Dec, 31, 2022 represents a 19.8% year-over-year growth from 2021.
Over the past month, shares of TKC have gained 5.7% and closed Friday’s trading session at $3.75.
TKC’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of B, which translates to Buy in our proprietary rating system.
TKC has a grade of A for Value. It has a B grade for Quality and Stability. Among the 46 stocks in the A-rated Telecom – Foreign industry, it is ranked #17.
Click here to see the additional POWR Ratings for Momentum, Sentiment, and Growth for TKC.
What To Do Next?
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SAN shares were trading at $3.40 per share on Monday afternoon, up $0.01 (+0.29%). Year-to-date, SAN has gained 3.34%, versus a -4.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...
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