The stock market continues to experience high volatility due to galloping inflation and deepening supply chain disruptions. Although the supply chain crisis eased slightly in January and February this year, the current conflict between Russia and Ukraine and lockdowns imposed in major Chinese cities with the surge in COVID-19 cases have resuscitated concerns over a supply shortage.
Though current ceasefire talks between Ukraine and Russia may cause oil, gold, and commodity prices to decline slightly this week, the stock market will likely remain under huge pressure in the near term. Analysts don’t expect the Fed to raise interest rates significantly this year, so an inflationary environment is expected to continue. So, to hedge one’s portfolio against high inflation, we think it could be wise to bet on high dividend-yielding stocks.
The stocks of fundamentally sound companies Crown Castle International Corporation (CCI), Suncor Energy Inc. (SU), Devon Energy Corporation (DVN), Sibanye-Stillwater Ltd. (SBSW), and Caledonia Mining Corporation Plc (CMCL) possess a history of consistent dividend payments and are trading at discounts to their peers. So, we think these stocks could be good bets to generate a steady income stream and beat inflation.
Crown Castle International Corporation (CCI)
CCI is a real estate investment trust (REIT) in Houston, Tex., that owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across the U.S. market. Its business provides access, including space or capacity, to its shared communications infrastructure via long-term contracts in various forms, including lease, license, sublease, and service agreements.
CCI will pay a $1.47 per share quarterly cash dividend on March 31, 2022. The stock pays a $5.88 per share dividend annually, translating into a 3.40% yield. Its dividend has grown at an 8.82% rate over the past five years. CCI has paid dividends for seven consecutive years.
On Jan. 6, 2022, CCI and T-Mobile US, Inc. (TMUS), an American wireless network operator majority-owned by German telecommunications company Deutsche Telekom AG (DTEGY), signed a new 12-year agreement to support the continued build-out of TMUS’ nationwide 5G network with increased access to CCI’s towers and small cell locations. The agreement should expand the reach of CCI’s comprehensive infrastructure consisting of towers, small cells, and fiber and generate long-term growth.
For its fiscal year 2021 fourth quarter, ended Dec.31, 2021, CCI’s net revenues came in at $1.65 billion, representing a 10.8% year-over-year improvement. The company had $292 million in cash and cash equivalents as of Dec.31, 2021.
Analysts expect CCI’s EPS to improve 53% year-over-year to $3.87 for its fiscal year 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $6.88 billion consensus revenue estimate for the same fiscal year represents an 8.5% rise from the prior-year period. The company’s EPS is expected to grow at a 12.4% rate per annum over the next five years.
Over the past month, the stock has gained 4.3% in price and closed yesterday’s trading session at $172.76. CCI’s trailing-12-month ROE, ROA, and ROTC are 13.1%, 3.3%, and 3.6%, respectively. And the company’s 44.32x non-GAAP forward P/E is 0.5% lower than the 44.55x industry average.
CCI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth, and a B grade for Stability, Sentiment, and Momentum. Click here to see the additional ratings for CCI’s Value and Quality.
CCI is ranked #8 of 51 stocks in the REITs – Diversified industry.
Suncor Energy Inc. (SU)
SU is a Calgary, Canada-based integrated energy company that focuses primarily on developing petroleum resource basins in Canada’s Athabasca oil sands, and markets crude oil, petroleum, and petrochemical products internationally. The company operates through four segments—Oil Sands; Exploration and Production; Refining and Marketing; and Corporate and Eliminations. It also markets crude oil, natural gas, byproducts, refined products, and power.
SU will pay a $0.42 per share quarterly cash dividend on March 25, 2022. The stock pays a $1.33 per share dividend annually, translating into a 4.32% yield. Its dividend has grown at a 2.16% rate over the past five years. SU has paid dividends for 30 consecutive years.
On Sept.16, 2021, SU signed agreements with eight Indigenous communities in the Regional Municipality of Wood Buffalo (RMWB) to acquire TC Energy Corporation’s (TRP) 15% equity interest in the Northern Courier Pipeline Limited Partnership. Connecting the Fort Hills asset to SU’s East Tank Farm asset, this pipeline will be operated by SU, and the ownership stake will provide long-term, stable revenues that should benefit the communities for decades to come.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, SU’s revenues and other income increased 69.2% year-over-year to $11.16 billion. The company’s EBIT came in at $2.05 billion, versus a $441 million loss in the year-ago period. Its adjusted net earnings came in at $1.29 billion, compared to a $109 million loss in the prior-year period. SU’s EPS came in at $1.07, versus a $0.11 loss per share in the year-ago period. As of Dec. 31, 2021, the company had $2.21 billion in cash and cash equivalents.
The $3.79 consensus EPS estimate for its fiscal 2022, ending Dec. 31, 2022, represents an 89.5% year-over-year improvement. Analysts expect the company’s revenue to be $38.50 billion for the same fiscal year, indicating a 26% rise from the prior-year period. SU’s EPS is expected to grow at a 6.3% rate per annum over the next five years.
SU stock has gained 1.5% in price over the past month and ended yesterday’s trading session at $29.71. Its trailing-12-month ROE, ROA, and ROTC are 11.4%, 4.5%, and 6.8%, respectively.
In terms of forward EV/EBITDA, SU is currently trading at 4.46x, which is 36.7% lower than the 7.04x industry average. In terms of forward Price/Cash Flow, SU is currently trading at 3.84x, which is 23.3% lower than the 5.01x industry average.
SU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Momentum and Quality and a B grade for Growth. Click here to see the additional ratings for SU (Stability, Sentiment, and Value).
SU is ranked #24 of 87 stocks in the B-rated Energy – Oil & Gas industry.
Devon Energy Corporation (DVN)
DVN is an independent energy company that engages primarily in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 3,942 gross wells. DVN is headquartered in Oklahoma City, Okla.
DVN will pay a record high fixed-plus-variable quarterly cash dividend of $1 per share on March 31, 2022. The stock pays a $4 per share dividend annually, translating to a 7.59% yield. The company’s dividend has grown at a 40.84% rate over the past five years. DVN has paid dividends for 22 consecutive years.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, DVN’s total revenues increased 233.8% year-over-year to $4.27 billion. The company’s oil, gas, and NGL sales came in at $2.99 billion, representing a 279.8% rise from the prior-year period. Its EBIT was $1.66 billion, versus a $110 million loss in the year-ago period. DVN’s non-GAAP net income was $935 million versus a $1 million loss in the prior-year period. Its non-GAAP EPS came in at $1.39. And the company had $2.10 billion in cash and cash equivalents as of Dec. 31, 2021.
The $6.65 consensus EPS estimate for its fiscal year 2022, ending Dec. 31, 2022, represents an 88.4% rise from the prior-year period. PEP surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. Its revenue is estimated to be $14.46 billion for the same quarter, indicating an 18.5% year-over-year improvement. Analysts expect the company’s EPS to grow at a rate of 17.2% per annum over the next five years.
Over the past month, the stock has gained 3.1% to close yesterday’s trading session at $53.01. DVN’s trailing-12-month ROE, ROA, and ROTC are 45.6%, 13.4%, and 17.5%, respectively.
DVN’s 5.68x forward EV/EBITDA is 19.2% lower than the 7.04x industry average. And in terms of forward Price/Cash Flow, DVN is currently trading at 4.90x, which is 2.3% lower than the 5.01x industry average.
DVN’s POWR Ratings reflect its solid prospects. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for DVN’s Value and Stability here.
DVN is ranked #31 of 88 stocks in the Energy – Oil & Gas industry.
Sibanye Stillwater Limited (SBSW)
SBSW is an independent, global precious metals mining company headquartered in Westonaria, South Africa. The company’s portfolio includes its platinum group metal (PGM) operations in the United States, South Africa, and Zimbabwe; gold operations and projects in South Africa; and copper, gold, and PGM exploration properties in North and South America.
SBSW will pay a $0.49 per share semi-annual dividend on April 11, 2022. The company pays a $0.99 dividend annually, representing a 5.99% yield. Its dividend has grown at a 44.29% rate over the past five years.
On Feb. 4, 2022, SBSW acquired the Sandouville nickel hydrometallurgical processing facility from Eramet SA, a French multinational mining and metallurgy company, for approximately €85 million ($93.2 million) in cash. Situated in the industrial heart of Europe at Le Havre, France’s second-largest industrial port, the current Sandouville facilities include a hydrometallurgical nickel refinery with high production capacity. SBSW should make full use of the potential of these facilities and gain reach in specific nickel battery metal products.
SBSW’s revenue increased 50.5% year-over-year to $11.64 billion for its fiscal year 2021, ended Dec. 31, 2021. The company’s pre-tax profit came in at $3.21 billion, up 49% from the year-ago period. While its net profit increased 22.7% year-over-year to $2.28 billion, its EPS grew 18.8% to $0.76. The company had cash and cash equivalents of R30.29 billion ($1.90 billion) as of Dec. 31, 2021.
The $4.22 consensus EPS estimate for its fiscal year 2022, ending Dec.31, 2022, indicates a 41.9% year-over-year improvement. SBSW’s EPS is expected to grow at a 4% rate per annum over the next five years.
Over the past month, the stock has gained 10.1% in price and ended yesterday’s trading session at $17.14. SBSW’s trailing-12-month ROE, ROA, and ROTC are 44.5%, 23.8%, and 35.7%, respectively.
SBSW’s 2.41x forward EV/EBITDA is 68.7% lower than the 7.68x industry average. In terms of forward Price/Cash Flow, SBSW is currently trading at 4.44x, which is 42.6% lower than the 7.74x industry average.
SBSW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Quality. Click here to see the additional ratings for SBSW (Growth, Sentiment, Stability, and Momentum).
SBSW is ranked #11 of 45 stocks in the Miners - Diversified industry.
Caledonia Mining Corporation Plc (CMCL)
CMCL primarily operates a gold mine and explores and develops mineral properties for precious metals. Its primary asset is the Blanket Mine, a gold mine located in Zimbabwe. CMCL is headquartered in St. Helier, Jersey.
CMCL paid a $0.14 per share quarterly cash dividend on Jan.28, 2022. The stock pays a $0.56 per share dividend annually, translating into a 4.18% yield. Its dividend has grown at a 36.34% rate over the past five years. CMCL has paid dividends for eight consecutive years.
On Feb. 24, 2022, CMCL entered a zero-cost contract to hedge approximately 25% of 2022 target gold production at Blanket Mine via a cap and collar hedging contract for 20,000 ounces of gold over a period of five months from March to July 2022. For 4,000 ounces of gold per month for the period, CMCL will receive an effective gold price per ounce between $1,825 and $1,940. This, along with rising gold prices, could help CMCL maintain a strong balance sheet during this phase.
CMCL’s revenue for its fiscal year 2021 third quarter, ended Sept. 30, 2021, increased 32.1% year-over-year to $33.50 million. The company’s gross profit came in at $15.74 million, representing a 25.4% year-over-year improvement. Its operating profit was $12.76 million, indicating a 21.4% rise from the year-ago period. CMCL’s net profit came in at $8.32 million for the quarter, up 53.3% from the prior-year period. Its EPS increased 54.1% year-over-year to $0.57. As of Sept. 30, 2021, the company had $13.01 million in cash and cash equivalents.
Analysts expect CMCL’s EPS to grow 26.5% year-over-year to $3.15 for its fiscal year 2022, ending Dec. 31, 2022. CMCL has gained 8.8% in price over the past month and ended yesterday’s trading session at $13.30. Its trailing-12-month ROE, ROA, and ROTC are 13.2%, 12.8%, and 14.5%, respectively.
In terms of forward EV/EBITDA, CMCL is currently trading at 3.23x, which is 57.9% lower than the 7.68x industry average. In terms of forward Price/Cash Flow, CMCL is currently trading at 3.61x, which is 53.3% lower than the 7.74x industry average.
CMCL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Value. Click here to see the additional ratings for CMCL (Growth, Stability, Momentum, and Quality).
CMCL is ranked #4 in the Miners - Diversified industry.
CCI shares were trading at $172.71 per share on Wednesday afternoon, down $0.05 (-0.03%). Year-to-date, CCI has declined -16.55%, versus a -9.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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