The latest GDP estimate showed that the U.S. economy was in contraction for the first half of this year, indicating a weaker economy as a direct consequence of the Federal Reserve’s series of interest rate hikes to cool off inflation and slow demand.
Moreover, the Federal Reserve is expected to launch another outsized rate hike in November. In an open letter to the central bank, Cathie Wood, founder of Ark Investment, said that the Fed is likely making a mistake in its hardline stance against inflation.
Though President Joe Biden said, “Our economy is strong as hell,” nearly every CEO expects a recession to hit America soon. Roger W. Ferguson Jr, vice chairman of the Business Council, said, “CEOs are now preparing for near-inevitable recessions in both the U.S. and Europe.”
In light of such recessionary concerns, we think fundamentally strong stocks Walmart Inc. (WMT), AbbVie Inc. (ABBV), The Coca-Cola Company (KO), and International Paper Company (IP), which have a history of consistent dividend payouts, could help you navigate a potential bear market.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On October 3, WMT’s division Sam’s Club launched its expanded Photo and Customization Services, where its members are granted access to professional photographers, enhanced photo printing services, as well as made-to-order apparel and home goods, making Sam’s Club the first to do so in this space.
On September 28, WMT celebrated the grand opening of Walmart’s first of four Next Generation Fulfillment Centers in Joliet, Illinois. The new FC should improve the operative capability of the company.
In February, WMT declared an annual dividend of $2.24 per share to be paid in four quarterly installments of $0.56 per share. Its annual dividend of $2.24 yields 1.72% on prevailing prices. The company’s dividend payouts have increased at a 1.9% CAGR over the past three and five years. The company has a record of 48 years of consecutive dividend growth.
WMT’s total revenues increased 8.4% year-over-year to $152.86 billion for the second quarter that ended July 31, 2022. Its consolidated net income rose 17.9% year-over-year to $5.15 billion, while its EPS grew 23.7% year-over-year to $1.88.
The consensus EPS estimate of $1.48 for the fiscal fourth quarter ending April 2023 represents a 14.1% improvement year-over-year. The consensus revenue estimate of $144.64 billion for the same quarter indicates a 3.1% increase from the prior-year period. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
Its stock gained marginally intraday to close the last trading session at $131.37.
WMT’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Sentiment and a B for Growth, Stability, and Quality. In the A-rated Grocery/Big Box Retailers industry, WMT is ranked #8 out of 38 stocks. To see the additional POWR ratings for WMT for Value and Momentum, click here.
AbbVie Inc. (ABBV)
ABBV is a healthcare company that discovers, develops, manufactures, and sells pharmaceuticals worldwide with a focus and capabilities to address health challenges.
On September 19, ABBV announced the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CMHP) adopted a positive opinion recommending the approval of risankizumab for treating adults with moderately to severely active Crohn’s disease. This marks a significant milestone for the company.
On August 31, ABBV company Allergan Aesthetics announced the launch of SkinMedica® Firm & Tone Lotion for Body, the professional-grade skincare line formulated to prevent and address visible signs of body skin aging. This should boost its product portfolio.
On September 9, ABBV declared a quarterly dividend of $1.41 per common share, payable to shareholders on November 15. Its annual dividend of $5.64 yields 3.95% on prevailing prices. The company’s dividend payouts have increased at a 9.6% CAGR over the past three years and a 17.3% CAGR over the past five years. The company has a record of eight years of consecutive dividend growth.
For the second quarter of 2022 ended June 30, ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion. Its adjusted earnings and adjusted earnings per share came in at $6.01 billion and $3.37, up 10.7% and 11.2% from the prior-year period.
Street EPS estimate of $3.78 for the fourth fiscal quarter ending December 2022 reflects a rise of 14.3% year-over-year. Likewise, Street revenue estimate for the same quarter of $15.84 billion indicates an improvement of 6.4% from the prior-year quarter. Additionally, ABBV has topped consensus EPS estimates in each of the trailing four quarters.
Over the past year, ABBV’s stock has gained 32.1% to close its last trading session at $144.41. It has gained 2.1% over the past five days.
This promising prospect is reflected in ABBV’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The stock also has an A grade for Quality and a B grade for Growth. It is ranked #4 out of 161 stocks in the Medical – Pharmaceuticals industry.
To see the additional POWR Ratings for ABBV for Value, Momentum, Stability, and Sentiment, click here.
The Coca-Cola Company (KO)
KO is a popular beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, and energy drinks.
On September 29, KO and Molson Coors Beverage Company (TAP) entered into an exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails inspired by the bright and refreshing taste of tequila and vodka-based beverages. It will be launched in more than 20 markets across the country in 2023 and might bolster the company’s revenue stream.
On July 21, KO declared a quarterly dividend of 44 cents per common share, payable to shareholders on October 3. Its annual dividend of $1.76 yields 2.90% on prevailing prices. The company’s dividend payouts have increased at a 3.1% CAGR over the past three years and a 3.6% CAGR over the past five years. The company has a record of 59 years of consecutive dividend growth.
KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion in the second quarter that ended July 1. Its non-GAAP gross profit grew 7.2% from the year-ago value to $6.67 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. The company’s non-GAAP net earnings per common share increased 2.9% from its year-ago value to $0.70.
KO’s EPS is estimated to improve by 5.9% year-over-year to $2.46 for the fiscal year ending December 2022. Similarly, its revenue estimate of $42.07 billion represents 8.8% growth from the prior year. On top of it, KO has surpassed EPS estimates in all four trailing quarters, which is impressive.
The stock has gained 2.2% over the past five days to close its last trading session at $55.69.
It’s no surprise that KO has an overall B rating, which translates to Buy in our proprietary rating system. Also, KO is rated a B in Stability, Sentiment, and Quality. Within the A–rated Beverages industry, it is ranked #20 out of 34 stocks.
Beyond what we’ve stated above, we have also given KO grades for Value, Momentum, and Growth. Get all KO ratings here.
International Paper Company (IP)
IP is a packaging company that operates primarily in the United States, Europe, Africa, Asia, the Middle East, and the rest of the Americas. It operates through the two broad segments of Industrial Packaging and Global Cellulose Fibers. The company sells its products directly to end users and converters, as well as through agents, resellers, and paper distributors.
On October 11, IP declared a quarterly dividend of $0.4625 per share on the common stock of $1.00 of the company, along with a quarterly dividend of $1.00 per share on the cumulative $4.00 preferred stock of the company. Both dividends are payable on December 15, 2022.
Its annual dividend of $1.85 yields 5.67% on prevailing prices. The company’s dividend payouts have increased at a 1.1% CAGR over the past five years.
For its fiscal second quarter ended June 30, IP’s net sales increased 13% year-over-year to $5.39 billion. Its adjusted operating earnings rose 41.2% year-over-year to $459 million. Also, its net earnings grew 17.7% year-over-year to $511 million, while its net EPS increased 26.6% from its prior-year quarter to $1.38.
Analysts expect IP’s EPS to be $1.26 for the fiscal fourth quarter depicting a growth of 61.4% year-over-year. Likewise, the $5.46 billion revenue estimate for the same quarter reflects a 7.4% rise from the prior-year quarter.
The stock has gained 5.3% over the past five days to close its last trading session at $33.23.
It is no wonder that IP has an overall B rating, which equates to Buy in our proprietary rating system. It also has a B grade for Value and Quality. It is ranked #7 out of 12 stocks in the A-rated Industrial – Paper industry.
Click here to see the additional POWR Ratings for IP (Growth, Momentum, Stability, and Sentiment).
Want More Great Investing Ideas?
REVISED: 2023 Stock Market Outlook (includes top 7 picks)
WMT shares were trading at $134.27 per share on Tuesday morning, up $2.90 (+2.21%). Year-to-date, WMT has declined -6.10%, versus a -20.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|WMT||Get Rating||Get Rating||Get Rating|
|ABBV||Get Rating||Get Rating||Get Rating|
|KO||Get Rating||Get Rating||Get Rating|
|IP||Get Rating||Get Rating||Get Rating|