Hotter-than-expected inflation numbers have strengthened the view that the Fed will raise interest rates by at least 75 basis points at its meeting this week. Analysts are worried that the Fed might overtighten and tip the economy into a recession.
The World Bank anticipates that the world might be edging toward a global recession as the three largest economies, the United States, China, and the Eurozone, have been experiencing a slowdown. The United States has already reported two consecutive quarters of GDP declines.
Therefore, it could be wise to invest in fundamentally strong dividend stocks Walmart Inc. (WMT), Pfizer Inc. (PFE), and Cigna Corporation (CI) to ensure a steady income stream as a recession is expected to be unavoidable.
Walmart Inc. (WMT)
WMT engages in retail and wholesale operations worldwide. The company operates through its three broad segments: Walmart U.S.; Walmart International; and Sam’s Club. It operates several stores and e-commerce websites.
On September 7, WMT and UnitedHealth Group (UNH) announced an initial 10-year collaboration to provide affordable health services. The collaboration is expected to start in 2023 with 15 Walmart Health locations in Florida and Georgia and is expected to expand into new geographies over time.
On August 30, 2022, WMT began recruiting Canada-based sellers to join its flagship U.S. Marketplace and serve a growing base of monthly online shoppers. The company also stated that it is focused on growing its Canada and U.S. marketplaces and investing in new tools and services for sellers.
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 yields 1.68%. The company’s dividend payouts have increased at a 1.9% CAGR over the past three years and a 1.9% CAGR over the past five years. The company has a record of 48 years of consecutive dividend growth.
WMT’s total revenues came in at $152.86 billion for the second quarter that ended July 31, 2022, up 8.4% year-over-year. Its net income increased 20.4% year-over-year to $5.15 billion, while its EPS came in at $1.88, up 23.7% year-over-year.
WMT’s revenue is expected to increase 4.7% year-over-year to $145.73 billion in its third fiscal quarter ending October 2022. Its consensus EPS is estimated to be $1.31 for the same quarter. Moreover, WMT has an impressive surprise earnings history, as it has surpassed EPS estimates in three of the four trailing quarters.
WMT’s stock has gained 12.6% over the past three months to close its last trading session at $133.19.
WMT’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
WMT has an A grade for Sentiment and a B in Growth, Stability, and Quality. It is ranked #8 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Beyond what we’ve stated above, we have also given WMT grades for Value and Momentum. Get all the WMT ratings here.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, as well as disease control and prevention centers.
On September 12, PFE and BioNTech SE (BNTX) announced a 30-µg booster dose of their Omicron BA.4/BA.5 bivalent-adapted COVID-19 Vaccine had been recommended for conditional marketing authorization (cMA) by the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) for individuals aged 12 years and older.
Moreover, on September 7, PFE announced its investigational Group B Streptococcus (GBS) vaccine candidate had received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) to prevent invasive GBS disease in newborns and young infants by active immunization of their mothers during pregnancy. The new recommendation and designation should benefit the company.
On June 23, PFE declared a quarterly dividend of $0.40 per share on its common stock, which was payable to shareholders on September 6. Its annual dividend of $1.60 yields 3.48%. The company’s dividend payouts have increased at a 5.7% CAGR over the past three years and a 5.9% CAGR over the past five years. The company has a record of 11 years of consecutive dividend growth.
PFE’s revenue increased 46.8% year-over-year to $27.74 billion in the second quarter ended July 3. Its income from continuing operations grew 69.6% from the year-ago value to $9.88 billion, while its adjusted income improved 93.5% year-over-year to $11.66 billion. The company’s adjusted earnings per common share increased 92.5% from its year-ago value to $2.04.
The consensus EPS estimate of $1.51 for the fourth fiscal quarter ending December indicates a 12.3% improvement year-over-year. Analysts expect its revenue to rise 4% year-over-year to $24.79 billion for the same quarter. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally intraday to close its last trading session at $46.03.
It’s no surprise that PFE has an overall A rating which translates to a Strong Buy in our POWR Ratings system.
PFE is rated an A in Value and a B in Sentiment and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #8 out of 164 stocks.
To see additional POWR Ratings for Growth, Momentum, and Stability for PFE, click here.
WMT shares were trading at $134.25 per share on Monday afternoon, up $1.06 (+0.80%). Year-to-date, WMT has declined -6.11%, versus a -17.65% 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...
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