The U.S. economy is teetering on the brink of a recession as it faces the double whammy of red hot inflation and consecutive rate hikes. The Fed raised interest rates four times this year, and the policymakers are planning on another large hike this September, aiming to bring down inflation to 2%.
On the other hand, U.S. GDP fell 0.9% at an annualized pace for the second straight quarter from April to June, raising the odds of a recession. The stock market ended the last week in a volatile trading session as the July job report came in better than expected, which could prompt the Fed to continue its rate tightening campaign.
Given the uncertainties, it could be wise to buy dividend stocks Steel Dynamics, Inc. (STLD), Westlake Corporation (WLK), Huntsman Corporation (HUN), WestRock Company (WRK), and Olin Corporation (OLN) to cushion your portfolio until the market recovers.
Steel Dynamics, Inc. (STLD)
Headquartered in Fort Wayne, Indiana, STLD operates as a steel producer and metal recycler in the United States through three segments: Steel Operations; Metals Recycling Operations; and Steel Fabrication Operations.
On July 19, 2022, STLD announced its plans to construct and operate a 650,000-tonne low-carbon, recycled aluminum flat rolled mill with two supporting satellite aluminum slab centers. The project is estimated to generate an annual EBITDA of $650 million to $700 million.
STLD’s $1.36 annual dividend yields 1.73% at its current share price. It paid its quarterly dividend of $0.34 on July 15, 2022. Its dividend payouts have increased at a 12% CAGR over the past three years and 15.3% over the past five years. The company has a record of nine consecutive years of dividend growth.
STLD’s net sales increased 39.1% year-over-year to $6.21 billion in the fiscal quarter ended June 30, 2022. Gross profit for the quarter came in at $1.88 billion, while its operating income stood at $1.62 billion, up 69.3% from its year-ago value. The company’s EPS increased 94% year-over-year to $6.44 in the same quarter.
Street expects STLD’s revenue for the fiscal quarter ending September 2022 to come in at $5.62 billion, indicating a 10.5% year-over-year increase. Its EPS is expected to improve 2.6% year-over-year to $5.09. The company beat the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 27.9% to close the last trading session at $78.78.
STLD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
STLD is also rated B in Value, Momentum, and Quality. Within the A-rated Steel industry, it is ranked #11 of 32 stocks. Click here to see additional POWR Ratings for Growth, Sentiment, and Stability for STLD.
Westlake Corporation (WLK)
WLK, together with its subsidiaries, manufactures and markets basic chemicals, vinyls, polymers, and building products worldwide. It operates through two segments: Vinyls and Olefins.
WLK’s $1.19 annual dividend yields 1.26% at its current share price. It paid its quarterly dividend of $0.30 on June 7, 2022. Its dividend payouts have increased at a 6% CAGR over the past three years and 9.3% over the past five years. The company has a record of 16 consecutive years of dividend growth.
WLK’s income from operations increased 63.2% year-over-year to $1.18 billion in the fiscal quarter ended June 30, 2022. EBITDA came in at $1.46 billion, up 56.2% year-over-year, while its net income grew 64.4% from the year-ago value to $858 million. The company’s EPS grew 63.4% from the prior-year quarter to $6.60 in the same period.
Analysts expect WLK’s revenue for the fiscal quarter ending September 2022 to come in at $4.23 billion, indicating an increase of 38.5% year-over-year. Also, the company’s EPS is expected to grow 11.5% year-over-year to $5.27 in the same period.
WLK gained 16.6% over the past year to close the last trading session at $94.37.
WLK’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company also has a B grade in Value and Quality. Out of the 89 stocks in the A-rated Chemicals industry, WLK is ranked #35. To get WLK’s ratings for Momentum, Stability, Sentiment, and Growth, click here.
Huntsman Corporation (HUN)
HUN manufactures and sells differentiated organic chemical products worldwide. The company operates through four segments: Polyurethanes; Performance Products; Advanced Materials; and Textile Effects.
The company’s $0.85 annual dividend yields 2.94% at its current share price. Its quarterly dividend of $0.21 is payable on September 30, 2022. Its dividend payouts have increased at a 7.2% CAGR over the past three years and 9.9% over the past five years.
For the fiscal second quarter ended June 30, 2022, HUN’s revenues came in at $2.36 billion, up 16.7% year-over-year. Its adjusted net income was $265 million, up 38.7% year-over-year, while its adjusted EPS came in at $1.28, up 48.8% year-over-year. Also, its adjusted EBITDA was $432 million, up 29.3% year-over-year.
HUN’s revenue is expected to be $9.36 billion in 2022, representing a 10.7% year-over-year rise. The company’s EPS is expected to increase 23.2% year-over-year to $4.36 in the same period. In addition, it surpassed the Street EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 14.4% to close the last trading session at $28.92.
Unsurprisingly, HUN has an overall B rating, equating to a Buy in our proprietary rating system. It has an A grade for Value.
HUN is ranked #31 in the Chemicals industry. Click here to see the additional POWR Ratings for HUN (Momentum, Stability, Sentiment, Growth, and Quality).
WestRock Company (WRK)
WRK provides fiber-based paper and packaging solutions in the Americas, Europe, Asia, and Australia. The company operates through two segments, Corrugated Packaging; and Consumer Packaging.
On July 27, WRK entered into an agreement to acquire the remaining interest in Grupo Gondi for $970 million. This acquisition is expected to help the company enhance its position in the growing Latin American containerboard, paperboard, and consumer and corrugated packaging markets.
“Acquiring the remaining interest in Grupo Gondi is the next strategic step in our broader North American paper and packaging expansion strategy,” said David B. Sewell, CEO of WRK.
WRK’s $1.00 annual dividend yields 2.49% at its current share price. Its quarterly dividend of $0.25 is payable on August 24, 2022.
For the fiscal quarter ended June 30, 2022, WRK’s net sales increased 14.6% year-over-year to $5.52 billion. Its adjusted net income grew 47.6% from the year-ago value to $396 million. Adjusted EBITDA for the quarter stood at $1.01 billion, reflecting a 24% increase year-over-year, while its EPS increased 58.1% year-over-year to $1.47.
Street expects WRK’s EPS for the fiscal year ending September 2022 to improve 41.7% year-over-year to $4.80. The consensus revenue estimate of $21.36 billion for the same period represents a 14% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 1.1% over the past month to close the last trading session at $40.19.
The company has an overall rating of B, translating to Buy in our proprietary POWR Ratings system. WRK also has a B grade in Growth, Value, and Quality.
Olin Corporation (OLN)
OLN manufactures and distributes chemical products in the United States, Europe, and globally. It operates in three segments- Chlor Alkali Products and Vinyls; Epoxy; and Winchester.
OLN’s $0.80 annual dividend yields 1.51% at its current share price. Its quarterly dividend of $0.20 is payable on September 9, 2022.
OLN’s sales increased 17.8% from the prior-year quarter to $2.62 billion in the fiscal quarter ended June 30, 2022. Operating income for the quarter came in at $565.40 million, reflecting an increase of 43.1% year-over-year, while its net income per share came in at $2.76, up 27.2% year-over-year.
The consensus EPS estimate of $9.38 for the fiscal year ending December 2022 represents a 16% improvement year-over-year. The consensus revenue estimate of $9.92 billion for the same period represents an 11.3% increase year-over-year.
OLN’s stock has gained 18.8% over the past month to close the last trading session at $52.87.
OLN’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system. OLN has an A grade in Quality and a B in Value. It is ranked #29 of 89 stocks in the Chemicals industry.
Beyond what is stated above, we’ve also rated OLN for Momentum, Sentiment, Stability, and Growth. Get all the OLN ratings here.
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STLD shares were trading at $78.75 per share on Monday afternoon, down $0.03 (-0.04%). Year-to-date, STLD has gained 28.03%, versus a -12.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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