The stock market closed lower on Wednesday, January 5, with the S&P 500 falling 1.9%, which indicates the index’s sharpest daily percentage fall since November 26. On top of it, the Dow Jones Industrial Average (DJIA) lost 1.1%, posting its worst daily drop since December 20.
The broader market uncertainty can be attributed to the news release of the latest Federal Open Market Committee meeting. The policy document showed a decidedly hawkish trend of the Fed officials, as they remain concerned about the pace of price increases and global supply chain bottlenecks. The probability of the Fed raising interest rates in March rose to more than 70%. Moreover, the 10-year treasury yields have recently surged as high as 1.75% because of investor assessments of tightening policies.
The CBOE Volatility Index (^VIX) has increased 13.4% over the past five days. Hence, the high-yield stocks of AT&T Inc. (T), BHP Group (BHP), TotalEnergies SE (TTE), and Vodafone Group Public Limited Company (VOD) might be the best bets to ensure a stable stream of income in 2022.
AT&T Inc. (T)
T is a telecommunication, media, and telecommunication services, global provider. The company operates through Communications; WarnerMedia; and Latin America segments. It operates AT&T, Cricket, and DIRECTV brand names, HBO Max and HBO Go platforms, and HBO and Cinemax pay-television services.
On January 4, T announced that it is joining forces with NVIDIA Corp. (NVDA) to elevate gaming experiences for PC gamers. This partnership should benefit the company, by leveraging NVDA’s insight and experiences.
On January 3, T declared that it is partnering with cellular-enabled virtual care technologies supplier Smart Meter, LLC, to provide better health outcomes for patients with chronic diseases. This venture in the fast-evolving healthcare space might prove to be profitable for the company.
On December 16, T declared a quarterly dividend of $0.52 on its common shares, payable to shareholders on February 1, 2022, which cumulates to an annual dividend of $2.08 and yields 7.94% on the current price. The company’s dividend payouts have increased at a CAGR of 1.3% over the past three years and a CAGR of 1.6% over the past five years. The company also declared quarterly dividends on its Series A and Series C preferred stock.
T’s adjusted operating income increased 2.5% year-over-year to $8.41 billion in the fiscal third quarter ended September 30. Net income attributable to common stock came in at $5.87 billion, up 112.5% from the same period last year, while adjusted EPS rose 14.5% from the prior-year quarter to $0.87.
Analysts expect T’s EPS to increase 5.3% year-over-year to $3.35 in the fiscal year 2021. In addition, T has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
T’s shares have gained 11.7% over the past month to close yesterday’s trading session at $26.21. It has gained 5.7% over the past five days.
T’s strong fundamentals are reflected in its POWR Ratings. The stock has a Value grade of B. It is ranked #5 out of the 19 stocks in the Telecom – Domestic industry. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
To see the additional POWR Ratings for Growth, Momentum, Stability, Sentiment, and Quality for T, click here.
BHP Group (BHP)
BHP functions as a natural resource organization, with two parent companies – BHP Group Limited and BHP Group Plc that operate as one. The company is engaged in natural resource businesses regarding minerals, oil, and gas. It is divided into Petroleum; Copper; Iron Ore; and Coal segments. BHP has its headquarters in Melbourne, Australia.
On November 22, BHP and Woodside Petroleum Ltd announced that they had entered into a share sale agreement to merge their oil and gas portfolios. Through this Scarborough joint venture, BHP is expected to receive a $150 million payment from Woodside upon the Financial Investment Decision (FID).
BHP, in September, declared a quarterly dividend of 200 cents, which was payable on September 21. Its annual dividend of $6.02 yields 9.70% on the current price. The company’s dividend payouts have increased at a CAGR of 36.6% over the past three years and 58.6% over the past five years.
For the fiscal year ended June 30, BHP’s revenue increased 41.7% year-over-year to $60.82 billion. EBITDA came in at $37.38 billion, indicating a 69.4% increase year-over-year. Its profit from operations and EPS rose 79.6% and 42.1% from the prior year to $25.91 billion and $2.24, respectively.
Analysts expect BHP’s revenue to increase 1.8% year-over-year to $61.93 billion for the fiscal year ending June 2022.
The stock has gained 16.4% over the past three months and 13.8% over the past month to close yesterday’s trading session at $62.05.
It’s no surprise that BHP has an overall B rating, which translates to Buy in our POWR Rating system. BHP has a Growth, Value, and Quality grade of B. In the 35-stock Industrial – Metals industry, it ranked #4. To see additional POWR Ratings for Momentum, Stability, and Sentiment, click here.
TotalEnergies SE (TTE)
TTE is an integrated oil and gas company that operates through the four segments of Exploration & Production; Integrated Gas; Renewables & Power; Refining & Chemicals; and Marketing & Services. The company is headquartered in Paris, France.
On December 21, TTE announced that it had signed a series of agreements for the sustainable development of natural gas resources with the Ministry of Energy and Minerals of the Sultanate of Oman. This should bolster the company’s global footprint. On the same day, the company announced the launch of the battery-based energy storage facility in France, which is expected to enhance its operative capability.
On October 27, TTE declared a third interim dividend of €0.66 per share ($0.75 per share). The dividend is expected to be paid to shareholders on April 1 and ADR holders on April 12. The company’s annual dividend of $3.06 yields 5.96% on the current price. Its dividend payouts have increased at a CAGR of 2.5% over the past five years.
TTE’s revenues from sales increased 80.3% year-over-year to $49.07 billion in the fiscal third quarter of 2021. Adjusted net income and adjusted EPS came in at $4.77 billion and $1.76, up 462.4% and 506.9% from the prior-year quarter, respectively.
The consensus EPS estimate of $2.12 for the last fiscal quarter of 2021 indicates a 360.9% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $56.69 billion reflects a rise of 49.4% from the prior-year quarter. Moreover, TTE has an impressive surprise earnings history, as it has topped consensus EPS estimates in three out of the trailing four quarters.
Over the past year, the stock has gained 18.2% to close yesterday’s trading session at $51.39. It has gained 12.2% over the past six months.
TTE’s promising prospects are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. TTE has a Momentum grade of A, and a Growth, Stability, and Sentiment grade of B. It is ranked #5 out of the 78 stocks in the Energy – Oil & Gas industry. The industry is rated B. Click here to see the additional POWR Ratings for TTE (Value and Quality).
Vodafone Group Public Limited Company (VOD)
VOD operates in the telecommunication services market in Europe and internationally. The company’s offerings include mobile services that enable customers to call, text, and access data and broadband services. It is based in Newbury, the United Kingdom.
On January 5, VOD announced its purchase of 5,706,084 ordinary shares as a part of its share buy-back program. This should enhance existing shareholder value.
As announced on November 16, VOD is expected to pay a dividend of 4.50 eurocents per ordinary share on February 4. The company’s annual dividend of $1.03 yields 6.65% on current prices.
VOD’s revenues increased 4.3% year-over-year to €11.39 billion ($12.88 billion) in the fiscal second quarter ended September 30. This can be attributed to a rise of 3.4% from the same period prior year in total service revenue to €9.62 billion ($10.88 billion). For the fiscal half-year ended September 30, adjusted profit for the financial period improved 25.8% from the prior-year quarter to €1.72 billion ($1.95 billion).
Street EPS estimate of $1.15 for the fiscal year ending March 2022 reflects a 16.3% year-over-year improvement.
The stock has gained 5% over the past month and 2.1% over the past five days to close yesterday’s trading session at $15.47.
VOD has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an A grade for Growth and a B grade for Stability. In the 47-stock Telecom – Foreign industry, it is ranked #22. The industry is rated A.
In addition to the POWR Ratings grades we’ve stated above, one can see VOD ratings for Value, Momentum, Sentiment, and Quality here.
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T shares were trading at $26.16 per share on Thursday afternoon, down $0.05 (-0.19%). Year-to-date, T has gained 6.34%, versus a -1.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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