Worries over a slowing economy amid high inflation and the Fed’s hawkish stance to tame it have kept the stock market under immense pressure. August’s consumer price index (CPI) increased 0.1% sequentially and 8.3% year-over-year, indicating that inflation is yet to be controlled.
The stubborn inflation is expected to spring the Federal Reserve back into action with its hawkish stance. Analysts are worried that the Fed’s actions might eventually tip the economy into a recession. Therefore, the stock market will likely remain under pressure.
Amid this backdrop, investors looking to buy and hold quality stocks for retirement may consider adding Visa Inc. (V) and The Coca-Cola Company (KO) to their portfolio. In addition to their steady growth prospects, their reliable dividend payments make them solid retirement picks.
Visa Inc. (V)
V is a leading payments technology company that facilitates digital payments among consumers, merchants, financial institutions, strategic partners, businesses, and government entities. In addition, it provides card products, platforms, and value-added services. The company offers its products and services under Visa, Visa Electron, Interlink, VPAY, and PLUS brands.
V’s four-year average dividend yield is 0.61%, and its current dividend translates to a 0.78% yield. Its dividends have grown at a 14.5% CAGR over the past three years and a 17.8% CAGR over the past five years. The company has been paying dividends for 13 consecutive years.
On May 31, 2022, V partnered with Fundbox, an embedded working capital platform for small businesses, to strengthen Fundbox’s platform with new digital payment capabilities. With this collaboration, Fundbox Flex Visa Debit Card, issued by Pathward, N.A., will be launched.
In addition, the companies will work together in the coming months to introduce a range of new payment products, including a Buy Now, Pay Later (BNPL) solution, and a push-to-card transfer option for instant fund disbursement through Visa Direct.
For the fiscal third quarter (ended June 30, 2022), V’s net revenues increased 18.7% year-over-year to $7.27 billion. Its operating income rose 2.1% from the year-ago value to $4.15 billion. The company’s non-GAAP net income grew 29.2% from the same period last year to $4.21 billion, while its non-GAAP EPS came in at $1.98, representing a 32.9% increase year-over-year.
Analysts expect V’s revenues to increase 15.5% year-over-year to $7.58 billion for the fiscal fourth quarter (ending September 30, 2022). Its EPS is expected to increase 15.3% to $1.87 in the current quarter. The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of V have gained marginally over the past three months to close the last trading session at $193.13.
V’s POWR Ratings reflect this promising outlook. It has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Stability, Sentiment, and Quality. The stock is ranked #7 of 49 stocks in the Consumer Financial Services industry. Click here to see the other ratings of V for Growth, Value, and Momentum.
The Coca-Cola Company (KO)
KO is a beverage company that manufactures, markets, and sells various non-alcoholic beverages globally. It sells its products under brands: Coca-Cola, Sprite, Fanta, Diet Coke, Coca-Cola Zero Sugar, Thumbs Up, Aquarius, fairlife, Minute Maid Pulpy, and Simply, among others.
On June 13, 2022, the company announced a global relationship with Brown-Forman Corporation to debut the iconic Jack & Coke cocktail as a branded, ready-to-drink (RTD) pre-mixed cocktail option. This should be widely in demand, given its brand popularity.
On July 21, 2022, KO declared a quarterly dividend of 44 cents per common share, payable to the shareholders on October 3, 2022. KO’s four-year average dividend yield is 3.09%, and its forward annual dividend of $1.76 translates to a 2.93% yield. Its dividend has grown at a 3.1% CAGR over the past three years and a 3.6% CAGR over the past five years.
KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion in the second quarter that ended July 1, 2022. Its gross profit grew 2.4% from the year-ago value to $6.49 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. The company’s non-GAAP EPS increased 2.9% from its year-ago value to $0.70.
Analysts expect KO’s EPS and revenue to increase 6.3% and 4.9% year-over-year to $0.48 and $9.94 billion, respectively, in its fiscal fourth quarter (ending December 2022). It surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 10.2% to close the last trading session at $59.99.
KO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. The stock is ranked #22 of 36 stocks in the A-rated Beverages industry. Click here to see the other ratings of KO for Growth, Value, and Momentum.
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V shares were trading at $192.01 per share on Tuesday morning, down $1.12 (-0.58%). Year-to-date, V has declined -10.93%, versus a -18.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
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