Last year has been difficult for the stock market, filled with challenges like the war between Ukraine and Russia, supply chain constraints, inflated crude oil prices, high inflation, and the Fed’s aggressive interest rate hikes.
Inflation touched multi-decade highs last year, prompting the Federal Reserve to increase the benchmark interest rate aggressively. Last week, the central bank increased the benchmark interest rate by a quarter of a percentage point for the eighth time since last year.
The aggressive interest rate hikes led to inflation easing for the sixth consecutive month in December. Fed Chairman Jerome Powell, at an event, said, “The disinflationary process, the process of getting inflation down, has begun, and it’s begun in the goods sector, which is about a quarter of our economy. But it has a long way to go. These are the very early stages.”
However, the U.S. economy added 517,000 jobs in January, significantly higher than analysts’ estimates of 187,000. Powell warned that if the U.S. job market strengthens further in the upcoming months or inflation rises; the central bank might have to raise its benchmark rates higher than its projection.
Amid uncertainties surrounding the economy and the stock market, investing in relatively stable and dividend-paying stocks could be wise. To that end, one could consider investing in dividend-paying low-beta stocks KT Corporation (KT), Weis Markets, Inc. (WMK), and Oil-Dri Corporation of America (ODC).
KT Corporation (KT)
Headquartered in Seongnam, South Korea, KT provides integrated telecommunications and platform services in Korea and internationally. The company operates through the Customer and Marketing businesses. Its services include wire and wireless phones, internet, and other communication. It has a beta of 0.41.
On September 7, 2022, KT announced that it had decided to cooperate with Hyundai Motor Group to promote the advancement of vehicle technology in the field of ‘connectivity.’ KT and Hyundai agreed to acquire shares of each company mutually through a treasury stock exchange to strengthen their long-term partnership.
KT pays a $0.75 per share dividend annually, which translates to a 5.62% yield on the current share price. Its four-year dividend yield is 4.59%.
In terms of the trailing-12-month net income margin, KT’s 5.55% is 42.7% higher than the 3.89% industry average. Likewise, its 19.70% trailing-12-month EBITDA margin is 2.3% higher than the industry average of 19.26%. Furthermore, the stock’s 13.50% trailing-12-month Capex/Sales is 238.5% higher than the industry average of 3.99%.
KT’s operating revenue for fiscal 2022 increased 3% year-over-year to ₩25.65 trillion ($20.36 billion). Its service revenue rose 4.4% year-over-year to ₩22.69 trillion ($18.01 billion). In addition, its operating income rose 1.1% from the prior-year period to ₩1.69 trillion ($1.34 billion). The company’s EBITDA increased 6.4% year-over-year to ₩5.35 trillion ($4.25 billion).
Analysts expect KT’s revenue for the quarter ending March 2023 is expected to increase 3.5% year-over-year to $3.72 billion. Its EPS for fiscal 2023 is expected to increase 3.9% year-over-year to $2.08. Over the past three months, the stock has gained 1.9% to close the last trading session at $13.43.
KT’s POWR Ratings reflect solid prospects. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #4 out of 47 stocks in the A-rated Telecom – Foreign industry. It has an A grade for Value and Stability. To see the other ratings of KT for Growth, Momentum, Sentiment, and Quality, click here.
Weis Markets, Inc. (WMK)
WMK is a food retailer that engages in the retail sale of food through a chain of supermarkets. The company operates primarily under the Weis Markets name and Weis, Weis Great Meals Start Here, Weis Gas-n-Go, and Weis Nutri-Facts brands. It has a beta of 0.33.
It paid a quarterly dividend of $0.34 per share on November 21, 2022. The company’s four-year average dividend yield is 2.40%, and its current forward dividend of $1.36 translates to a 1.61% yield. Its dividends have grown at a 1.6% CAGR each over the past three and five years.
In terms of the trailing-12-month Return on Total Capital, WMK’s 6.67% is 8.3% higher than the 6.16% industry average. Likewise, its 6.13% trailing-12-month Return on Total Assets is 72% higher than the industry average of 3.56%. Furthermore, the stock’s 2.36x trailing-12-month asset turnover ratio is 190.2% higher than the industry average of 0.81x.
For the third quarter ended September 24, 2022, WMK’s net sales increased 8.2% year-over-year to $1.15 billion. Its comparable store sales rose 7.9% year-over-year. The company’s net income increased marginally to $28.66 million. In addition, its EPS came in at $1.07, rising 0.9% year-over-year.
Analysts expect WMK’s EPS to grow 11% per annum over the next five years. Over the past year, the stock has gained 37% to close the last trading session at $84.29.
It’s no surprise that WMK has an overall rating of B, which equates to a Buy in our POWR Ratings system. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #17 out of 39 stocks.
It has an A grade for Stability and Quality. Click here to see the other ratings of WMK for Growth, Value, Momentum, and Sentiment.
Oil-Dri Corporation of America (ODC)
ODC manufactures and supplies specialty sorbent products for pet care, animal health and nutrition, fluids purification, agricultural ingredients, sports field, and industrial and automotive markets. It operates in two segments, Retail and Wholesale Products Group and Business to Business Products Group. It has a beta of 0.51.
ODC is expected to pay a quarterly dividend of $0.28 on February 24, 2023. Its annual dividend of $1.12 yields 2.94% on the current share price. The company’s dividend payouts have increased at a 3.9% CAGR over the past three years and a 4.1% CAGR over the past five years. Its four-year dividend yield is 3.18%.
In terms of the trailing-12-month Return on Total Assets, ODC’s 4.15% is 16.4% higher than the industry average of 3.56%. Furthermore, the stock’s 1.54x trailing-12-month asset turnover ratio is 89.7% higher than the industry average of 0.81x.
ODC’s net sales for the first quarter ended October 31, 2022, increased 19% year-over-year to $98.54 million. Its gross profit increased 61.5% year-over-year to $22.31 million. The company’s net income attributable to common shareholders rose 796% from the prior-year period to $5.24 million. Its EPS rose significantly year-over-year to $0.78.
Analysts expect ODC’s EPS to rise 1.6% per annum over the next five years. Over the past nine months, the stock has gained 52.7% to close the last trading session at $38.10.
ODC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has an A grade for Growth and Stability and a B for Sentiment. It is ranked #19 out of 87 stocks within the B-rated Chemicals industry. To see the other ratings of ODC for Value, Momentum, and Quality, click here.
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KT shares were unchanged in premarket trading Thursday. Year-to-date, KT has declined -0.52%, versus a 7.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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