Since the economic outlook is uncertain, analysts do not expect the Fed to raise interest rates significantly this year. However, the end of the prolonged ultra-low interest rate environment has made investors anxious. The Russia-Ukraine war is also expected to continue dampening investor sentiment. However, with the latest diplomatic talks between Ukraine and Russia, oil prices have declined. So, given the current market uncertainty, we think it could be wise to bet on fundamentally strong dividend stocks.
With robust financials and a solid record of consistent dividend growth, dividend aristocrats are the best choices for investors amid uncertain market conditions. Investors’ interest in this space is evident in the ProShares S&P 500 Dividend Aristocrats ETF’s (NOBL) 7.7% returns over the past year.
Wall Street analysts expect dividend aristocrats The Sherwin-Williams Company (SHW), PPG Industries, Inc. (PPG), Stanley Black & Decker, Inc. (SWK), and Albemarle Corporation (ALB) to rally by more than 35% in price in the coming months. So, these stocks could be good additions to one’s watchlist.
The Sherwin-Williams Company (SHW)
SHW in Cleveland, Ohio, develops, manufactures, distributes paints, coatings, and related products to professional, industrial, commercial, and retail customers. It has three segments: The Americas Group; Consumer Brands Group; and Performance Coatings Group.
On Jan. 27, 2022, Chairman, President, and CEO John G. Morikis, said, “Our full year and fourth quarter were marked by industry-wide supply chain disruptions, unprecedented cost inflation, and ongoing challenges related to the pandemic. The 61,000 dedicated employees of Sherwin-Williams refused to use these challenges as an excuse but rather as an opportunity to get even closer to our customers. We focused on minimizing the impact to their businesses through innovation, value-added services, and differentiated distribution.”
SHW has been paying and increasing its dividend payment consecutively for more than 40 years. Over the past three years, its dividend payouts have grown at a 22.1% CAGR. SHW’s four-year average dividend yield is 0.79%. Its current dividend translates to a 1.01% yield.
For the fiscal fourth quarter, ended Dec. 31, 2021, SHW’s net sales increased 6.1% year-over-year to $4.76 billion. In addition, the company’s total current assets came in at $5.05 billion for the period ended Dec. 31, 2021, versus $4.59 billion for the period ended Dec. 31, 2020. Also, its total assets came in at $20.67 billion compared to $20.40 billion for the same period.
SHW’s revenue is expected to be $21.74 billion in its fiscal year 2022, representing a 9% year-over-year rise. The company’s EPS is expected to increase 18.2% year-over-year to $11.15 in 2023. The stock has gained 1.4% in price over the past year to close yesterday’s session at $242.44. Wall Street analysts expect the stock to hit $331.47 in the near term, which indicates a potential 36.7% upside.
PPG Industries, Inc. (PPG)
PPG manufactures and distributes paints, coatings, and specialty materials worldwide. The Pittsburgh. Pa., company’s segments are Performance Coatings and Industrial Coatings, and it operates and innovates in more than 75 countries worldwide.
On Jan. 20, 2022, Michael H. McGarry, PPG chairman and CEO, said, “Strategically, we made progress in strengthening the company with the successful integration of five acquisitions and further optimizing our cost structure, including $135 million of cost savings from our restructuring programs. We continued to reward our shareholders by extending our consecutive annual dividend payments to over 120 years, including raising our annual dividend payout for the 50th successive year.”
PPG has been paying and increasing its dividend payments consecutively for more than 45 years. PPG’s dividend payouts have grown at a 6.9% CAGR over the last three years and at a CAGR of 7.6% in the past five years. While PPG’s four-year average dividend yield is 1.64%, its current dividend translates to a 1.94% yield.
For the fourth quarter, ended Dec. 31, 2021, PPG’s net sales increased 11.5% year-over-year to $4.19 billion. The company’s net income came in at $286 million, up 5.1% year-over-year, while its EPS came in at $1.20, up 5.3% per annum.
Analysts expect PPG’s revenue to increase 10% to $18.49 billion in 2022. Its EPS is estimated to grow 22% to $9 in 2023. It surpassed EPS estimates in three of the four trailing quarters. And the stock closed yesterday’s trading session at $123.37. Wall Street analysts expect the stock to hit $175.38 in the near term, which indicates a potential 42.2% upside.
Stanley Black & Decker, Inc. (SWK)
SWK engages in the tools and storage and industrial businesses in the United States, Canada, rest of Americas, France, rest of Europe, and Asia. The New Britain, Conn.-based company operates through the Tools and Storage segment and Industrial segment.
On Feb. 1, 2022, SWK’s CEO Jim Loree said, “We completed 2021 with a series of strategic transactions that focused our core business, including establishing Stanley Black & Decker is a global leader in the $25 billion outdoor power equipment market as well as announcing the pending sale of our electronic security business.”
SWK has been consistently paying and increasing dividends for more than 50 years. While the four-year average dividend yield for SWK is 1.78%, its current dividend translates to a 2.18% yield. Its dividend payouts have grown at a 6% CAGR over the past five years.
SWK’s net sales increased 1.6% year-over-year to $4.07 billion in the fourth quarter, ended Jan. 1, 2022. Its total current assets came in at $8.53 billion for the period ended Jan. 1, 2022, compared to $6.04 billion for the period ended Jan. 2, 2021. Furthermore, its total assets came in at $28.20 billion, compared to $23.57 billion for the same period.
For its fiscal year 2022, SWK’s revenue is expected to grow 24.6% year-over-year to $19.47 billion. Its EPS is expected to grow 10.8% per annum for the next five years. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday’s session at $145.76. Wall Street analysts expect the stock to hit $206.90 in the near term, which indicates a potential 42% upside.
Albemarle Corporation (ALB)
ALB, a Baton Rouge, La.-based global specialty chemicals company, develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Lithium; Bromine; and Catalysts.
On Feb.16, 2022, ALB’s CEO Kent Masters said, “Our Lithium and Bromine businesses are performing well. With a firm focus on executing our growth strategy, we are well-positioned for opportunities to deliver significant value to our shareholders. The strategic investments we’ve made in our Lithium business, as well as the progress of several key projects, will enable us to potentially double our nameplate capacity by the end of 2022 and accelerate our Wave 3 projects.”
ALB has been paying and increasing its dividends consecutively for more than 25 years. ALB’s dividend payouts have grown at a CAGR of 5.2% over the past three years. Its four-year average yield is 1.47%. Also, its current dividend translates to a 0.9% yield.
ALB’s net sales came in at $894.20 million for the fourth quarter, ended Dec. 31, 2021, up 1.7% year-over-year. The company’s total assets came in at $10.97 billion for the period ended Dec. 31, 2021, compared to $10.45 billion for the period ended Dec. 31, 2020. Also, its other assets came in at $252.24 million, compared to $219.27 million for the same period.
Analysts expect ALB’s revenue to increase 32.1% year-over-year to $4.40 billion in 2022. Its EPS is expected to grow 41.2% year-over-year to $8.57 in 2023. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 14.6% in price over the past year to close yesterday’s trading session at $181.95. Wall Street analysts expect the stock to hit $249.47 in the near term, which indicates a potential 37.1% upside.
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SHW shares were trading at $248.48 per share on Wednesday morning, up $6.04 (+2.49%). Year-to-date, SHW has declined -29.28%, versus a -8.85% 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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