Increasing sanctions on Russia have been worsening supply chains and rising energy prices. U.S. natural gas prices surged to a 13-year high last week. And inflation skyrocketed in March to hit a fresh 40-year high, increasing the odds of aggressive federal interest rate hikes later this year. Many experts expect these factors to result in a recession in the coming months. According to Goldman Sachs, the odds of an economic contraction stand at about 35% over the next two years.
Therefore, investing in top-notch dividend stocks should be safer and wiser now. Investors’ interest in dividend stocks is evident in the SPDR S&P Dividend ETF’s (SDY) 4.5% returns over the past month.
Therefore, we think fundamentally sound stocks Companhia Siderúrgica Nacional (SID), Petróleo Brasileiro S.A. - Petrobras (PBR), Altria Group, Inc. (MO), Lufax Holding Ltd (LU), and Enterprise Products Partners L.P. (EPD), which currently offer more than 4% dividend yields, could be good bets to generate a steady income stream amid an uncertain market and economic environment.
Companhia Siderúrgica Nacional (SID)
Headquartered in São Paulo, Brazil, SID operates is an integrated steel producer in Brazil and Latin America. The company operates in five segments: Steel; Mining; Logistics; Energy; and Cement.
In 2021, SID invested R$2.93 billion ($620 million), up 73% year-over-year, signaling its advances in processing projects and its capacity increase in mining.
SID’s forward annual dividend translates to a 7.54% yield.
SID’s net sales revenues came in atR$10.36 billion ($2.20 billion) for the fourth quarter ended Dec. 31, 2021, up 5.8% year-over-year. Its cash and cash equivalents came in at R$16.65 billion ($3.54 billion) for the period ended Dec. 31, 2021, compared to R$9.94 billion ($2.11 billion) for the period ended Dec. 31, 2020. Its current assets were R$34.97 billion ($7.44 billion) compared to R$23.39 billion ($4.97 billion) also for the same period.
SID’s EPS is expected to grow 3.9% per annum for the next five years. Over the past three months, the stock has gained 15.6% in price to close Friday’s trading session at $5.34.
SID’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SID has an A grade for Momentum and Quality and a B grade for Value. Within the A-rated Steel industry, it is ranked #20 of 34 stocks. Click here to see the additional POWR Ratings for Growth, Stability, and Sentiment for SID.
Note that SID is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Petróleo Brasileiro S.A. - Petrobras (PBR)
Headquartered in Rio de Janeiro, Brazil, PBR explores, produces, and sells oil and gas in Brazil and internationally. The company operates through Exploration and Production; Refining Transportation and Marketing; Gas and Power; and Corporate and Other Businesses segments.
On Feb. 23, 2022, PBR’s CEO, Joaquim Silva e Luna, said, “Petrobras generated consistent results in 4Q21, demonstrating that a healthy company committed to society is capable of growing, investing, generating jobs, paying taxes, and returning money to its shareholders, effectively contributing to the country’s development.”
PBR’s four-year average yield is 3.49%, while its current dividend translates to a 4.17% yield.
PBR’s sales revenues increased 72.7% year-over-year to $24.03 billion for the fourth quarter, ended Dec. 31, 2021. Its gross profit came in at $10.58 billion, up 40.5% year-over-year. The company’s adjusted EBITDA came in at $11.28 billion, up 28% year-over-year.
For its fiscal year 2022, analysts expect PBR’s revenue to be $103.56 billion, representing a 23.3% year-over-year rise. The company’s EPS is expected to increase 38.7% to $3.30 in 2022. Over the past year, the stock has gained 73.3% to close Friday’s trading session at $14.71.
PBR’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system.
Also, the stock has an A grade for Momentum and Quality and a B grade for Growth. Within the A-rated Foreign Oil & Gas industry, it is ranked #13 of 42 stocks. Click here to see the additional POWR Ratings for Value, Stability, and Sentiment for PBR.
Altria Group, Inc. (MO)
MO in Richmond, Va., and its subsidiaries manufacture and sell smokable and oral tobacco products in the United States. It sells its tobacco products primarily to wholesalers, including distributors; and large retail organizations, such as chain stores.
On April 5, 2022, MO announced its virtual power purchase agreement (VPPA) for energy produced by a new wind farm project in Haskell and Throckmorton Counties, Texas. Sal Mancuso, Executive Vice President and CFO said, “This is our first-ever VPPA and marks significant progress towards our science-based environmental targets–achieving 100 percent renewable electricity and reducing operational greenhouse gases emissions by 55 percent by 2030.”
MO’s dividend payouts have grown at an 8.3% CAGR over the past five years. Its four-year average yield is 6.85%, while its current dividend yield is 6.55%.
MO’s gross profit came in at $3.31 billion for the fourth quarter, ended Dec. 31, 2021, up 5.4% year-over-year. Its operating income was $2.73 billion, up 5.9% year-over-year. Also, its adjusted EPS came in at $1.09, up 10.1% year-over-year.
For its fiscal year 2023, analysts expect MO’s revenue to increase 1.5% year-over-year to $21.37 billion. Its EPS is expected to increase 6.2% to $5.14 in 2023. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 15.6% in price to close Friday’s session at $54.98.
MO has an overall B rating, which indicates a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth. Within the B-rated Tobacco industry, it is ranked #3 of 10 stocks. Click here to see the additional POWR Ratings for Value, Momentum, Stability, and Sentiment for MO.
Lufax Holding Ltd (LU)
Headquartered in Shanghai, China, LU operates a technology-empowered personal financial services platform in China. It offers loan products that include unsecured and secured loans and consumer finance loans.
On March 9, 2022, Ji Guangheng, LU’s Chairman, said, “Looking ahead, we will continue to leverage the competitive advantages born out of our unique business model, methodically execute our strategic adjustments, reward our shareholders through share repurchases and dividend payouts, empower small business owners with high-quality financial services, and deliver growing value for our shareholders and society at large.”
LU’s forward annual dividend translates to a 6.23% yield.
For the fourth quarter, ended Dec.31, 2021, LU’s total income came in at $2.48 billion, up 19.2% year-over-year. Its adjusted net profit came in at $535 million, up 19.7% year-over-year. Furthermore, its cash at bank came in at $5.45 billion for the period ended Dec. 31, 2021, compared to $3.79 billion for the period ended Dec. 31, 2020.
LU’s revenue is expected to increase 12.2% to $12.10 billion in 2023. Its EPS is estimated to increase 16.2% to $1.22 in 2022. It surpassed EPS estimates in three of the four trailing quarters. And over the past month, the stock gained 21.7% in price to close Friday’s trading session at $5.46.
LU has an overall B rating, which equates to Buy in our POWR Ratings system. It has a B grade for Value, Sentiment, and Quality. Click here to check additional ratings for LU (Growth, Momentum, and Stability). LU is ranked first of 11 stocks in the B-rated Foreign Consumer Finance industry.
Enterprise Products Partners L.P. (EPD)
EPD in Houston, Tex., provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. It operates through four segments: NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.
On Feb. 1, 2022, A. J. “Jim” Teague, co-CEO of EPD’s general partner, said, “Entering 2022, we expect a continuation in the global economic recovery and growth in crude oil, natural gas and NGL production in the United States, driven primarily by the Permian Basin and Haynesville shale. We believe both will provide Enterprise a solid economic foundation.”
Over the last five years, EPD’s dividend payouts have grown at a 2.4% CAGR. While its four-year average dividend yield is 7.56%, its current dividend translates to a 6.96% yield.
EPD’s operating income increased 98.3% year-over-year to $1.40 billion in the fourth quarter ended Dec. 31, 2021. Its net income came in at $1.06 billion, up 191% year-over-year, while its EPS came in at $0.47, up 213.3% year-over-year.
Analysts expect EPD’s revenue to increase 8.5% year-over-year to $44.27 billion in its fiscal year 2022. Its EPS is estimated to increase 10.2% per annum for the next five years. Over the past year, the stock has gained 15.6% in price to close Friday’s session at $26.74.
EPD has an overall B rating, which indicates a Buy in our proprietary rating system.
EPD has an A grade for Momentum and a B grade for Value. Within the A-rated MLPs - Oil & Gas industry, it is ranked #13 out of 35 stocks. Click here to see the additional POWR Rating for Growth, Stability, Sentiment, and Quality for EPD.
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SID shares were trading at $5.26 per share on Monday morning, down $0.08 (-1.50%). Year-to-date, SID has gained 19.32%, versus a -7.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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