With the steady stream of optimistic economic data, the stock market achieved a strong start this year. Despite widespread concern that the economy might be on the brink of a recession, the market closed off the first month with healthy gains. Equity markets moved away from their lows while fears of inevitable recession have been replaced by optimism about avoiding one.

The recent inflation data suggested that Federal Reserve policy measures are starting to cool off skyrocketing price gains, while a stronger-than-expected Gross Domestic Product (GDP) reading reflects that the U.S. economy remains on solid footing and could have a soft landing.

However, inflation isn’t slowing at such a rapid pace as to suggest rate cuts from the Federal Reserve later this year. The World Bank warns that the global economy could tip into recession in 2023, as it slashed its 2023 growth forecasts last month. The banks expect global GDP growth of 1.7% in 2023, down from its June 2022 forecast of 3% global growth this year.

While a soft landing versus a recession debate continues to intensify this year, defensive players are likely to perform well due to their inelastic demand. Therefore, investors could invest in fundamentally strong dividend-paying stocks Walmart Inc. (WMT), Bristol-Myers Squibb Company (BMY), and CVS Health Corporation (CVS) to reap significant gains in 10 years.

Walmart Inc. (WMT)

The retail giant WMT operates supercentres, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and e-commerce websites. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.

On January 12, 2023, Walmart Commerce Technologies and Walmart GoLocal announced a partnership with Salesforce.com Inc. (CRM) to give retailers access to the tools and services that enable frictionless local pickup and delivery for customers globally.

On December 15, 2022, WMT Canada announced its plans to open a first-of-its-kind distribution center in Quebec in addition to two distribution centers that opened earlier that year. Another distribution center in Mexico is strengthening its logistics and supply chain networks across the entire Southeast region.

Such investments in infrastructure, logistics, and supply chains should enable the company to bolster its distribution networks and offer a brisker shopping experience to its customers.

WMT’s four-year average dividend yield is 1.68%, and its forward annual dividend of $2.24 translates to a 1.58% yield on prevailing prices. Its dividend has grown at a 1.8% CAGR over the past three years and a 1.9% CAGR over the past five years. The company has a record of 49 consecutive years of dividend growth.

For the fiscal third quarter that ended October 28, 2022, WMT’s total revenues increased 8.7% year-over-year to $152.81 billion. Its adjusted operating income grew 4.6% from the year-ago value to $6.06 billion, while its adjusted EPS came in at $1.50, representing an increase of 3.4% year-over-year. Also, the company’s total assets increased by 1.1% from the prior-year value to $247.66 billion.

Analysts expect WMT’s revenue for the fourth quarter (ended January 31, 2023) to increase 4.4% year-over-year to $158.24 billion, while its EPS is expected to amount to $1.51. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 8.9% to close the last trading session at $143.87.

WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Stability, Sentiment, and Quality. Among 39 stocks in the A-rated Grocery/Big Box Retailers industry, it is ranked #8. Click here to see the other ratings of WMT for Growth, Value, and Momentum.

Bristol-Myers Squibb Company (BMY)

BMY is a biopharmaceutical company offering pharmaceutical products for treating hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.

On January 27, 2023, BMY received a positive Committee for Medicinal Products for Human Use (CHMP) opinion for Reblozyl® (luspatercept) as a treatment for adult patients with anemia-associated, non-transfusion-dependent (NTD) beta thalassemia. In the pivotal BEYOND study, Reblozyl significantly increased hemoglobin levels, which were sustained over a longer time compared to placebo.

On the same day, CHMP also gave a positive opinion for once-daily Sotyktu (deucravacitinib) as a treatment for adults with moderate-to-severe plaque psoriasis. Sotyktu has demonstrated superior efficacy over twice-daily Otezla® (apremilast) and placebo in improving skin clearance and symptoms.

Such positive approvals are expected to expand the adoption of Reblozyl and Sotyktu in Europe.

On December 20, 2022, the company received approval in Japan for the CAR T Cell Therapy Breyanzi for the second-line treatment of relapsed or refractory large B-cell lymphoma (LBCL). The approval might benefit the company by meeting this unmet medical need.

On December 8, the company increased the quarterly dividend by 5.6% to $0.57 per share on the common stock, payable to its shareholders on February 1, 2023. This marks the 14th consecutive fiscal year the company increased its dividend and the 91st consecutive year it paid a dividend.

BMY’s four-year average dividend yield is 3.02%, and its forward annual dividend of $2.28 translates to a 3.17% yield on current prices. Its dividends have grown at 9.2% and 6.9% CAGRs over the past three and five years, respectively.

For the third quarter that ended September 30, 2022, BMY’s total in-line products and new product portfolio revenue increased 8% year-over-year to $8.62 billion. Its non-GAAP EBIT grew 0.9% year-over-year to $5.13 billion, while net earnings attributable to BMY increased 3.9% year-over-year to $1.61 billion. The company’s non-GAAP EPS increased 3.1% from its prior-year quarter to $1.99.

Analysts expect BMY’s EPS and revenue for the fiscal year 2023 (ending December 31, 2023) to increase 4.8% and 2.7% year-over-year to $7.98 and $47.18 billion, respectively. The stock surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.

Shares of BMY have gained 12% over the past year to close the last trading session at $72.65.

It is no surprise that BMY has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system. It has an A grade for Value and a B for Stability, Sentiment, and Quality. Out of 172 stocks in the Medical – Pharmaceuticals industry, it is ranked #3.

Beyond what we’ve stated above, we’ve also rated BMY for Growth and Momentum. Get all BMY ratings here.

CVS Health Corporation (CVS)

CVS is a health service provider operating through four segments: Health Care Benefits; Pharmacy Services; Retail/LTC; and Corporate/Other. Its offerings include health & wellness services, health plans, pharmacy services, and prescription drug coverage.

On January 24, 2023, CVS Accountable Care Organization, Inc., a division of the CVS Health family of businesses, announced a collaboration with RUSH University System for Health (RUSH) to expand access for Medicare patients to RUSH clinical services in the Chicago area.

This agreement reflects a strong commitment and establishes a new Accountable Care collaboration that emphasizes health equity, coordinated care, and improved access for patients.

On December 15, 2022, the company’s board of directors declared a quarterly dividend of $0.605 per share on its common stock, payable on February 1, 2023, reflecting an increase of 10% from the previous quarter.

CVS’ four-year average dividend yield is 2.76%, and its current dividend of $2.42 translates to a 2.74% yield on the current price level. Its dividends have grown at a 4.1% CAGR over the past three years and a 2.4% CAGR over the past five years.

In the same month, CVS announced the opening of its first MinuteClinic locations in northern Delaware. MinuteClinic would provide high-quality, affordable, and convenient care for acute and chronic conditions for patients aged 18 months and older.

“With only 16.4% of the primary care physicians needed currently available in Delaware, we are focused on expanding our presence to help increase access to high-quality, affordable health care for people in the communities where they live and work.”, said Creagh Milford, Senior Vice President of Retail Health at CVS.

CVS’ total revenue for the fiscal third quarter that ended September 30, 2022, increased 10% year-over-year to $81.16 billion. The company’s adjusted operating income grew 3.9% year-over-year to $4.23 billion, while its adjusted attributable net income rose 5.3% from the year-ago value to $2.76 billion. Also, its adjusted EPS increased 6.1% year-over-year to $2.09.

Street expects CVS’ EPS and revenue for the fiscal year 2022 to increase 2.8% and 7.7% year-over-year to $8.64 and $314.70 billion, respectively. It surpassed the EPS estimates in each of the trailing four quarters. The stock has lost 5.3% over the past month to close the last trading session at $88.22.

CVS’ POWR Ratings reflect its solid prospects. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

It has an A grade for Growth and a B for Value, Stability, and Sentiment. It is ranked first out of four stocks in the B-rated Medical – Drug Stores industry. Click here to see the other ratings of CVS for Momentum and Quality.

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WMT shares were trading at $143.72 per share on Wednesday morning, down $0.15 (-0.10%). Year-to-date, WMT has gained 1.36%, versus a 5.96% 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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