While savings and government aid during the pandemic helped consumers keep their wallets stable, high inflation and rigorous rate hikes are taking a bite out of everything.
Although October’s inflation report shows signs of cooling down, Fed Chair Jerome Powell has cautioned that the final level of interest rates will be higher than expected. He said rates need to rise higher than forecasted until they reach a “sufficiently restrictive” level. As a result, many experts foresee the economy slipping into a recession next year, leading to an economic downturn.
According to Bankrate’s third-quarter survey, 65% of economists expect the U.S. economy to contract within the next 12 to 18 months. The estimates have grown significantly since the first quarter when 33% of the surveyed population expected a recession.
The uncertain market environment necessitates adding a defensive layer to retirement portfolios. To that end, fundamentally strong dividend-paying stocks Global Partners LP (GLP) and Sisecam Resources LP (SIRE) could be good additions to a retirement portfolio.
Global Partners LP (GLP)
GLP purchases, sell, gathers, blends, stores, and manages the logistics of transporting gasoline and gasoline blend stocks, distillates, residual oil, renewable fuels, crude oil, and propane to wholesalers, retailers, and commercial customers in the New England states, Mid-Atlantic region and New York.
On September 21, 2022, the company further expanded its retail footprint in the Mid-Atlantic region by acquiring Tidewater Convenience, Inc., with 15 locations in Southeast Virginia. Mark Cosenza, SVP of Gasoline, Distribution, and Station Operations, said, “We are committed to continuing to expand by adding strategic locations to our vertically integrated network. Virginia is a key market that complements our existing portfolio.”
The company’s four-year average dividend yield is 10.96%, and its forward annual dividend of $2.50 translates to an 8.18% yield. Its dividends have grown at 5.6% and 5.4% CAGRs over the past three and five years. It paid a quarterly dividend of $0.6250 on November 14, 2022.
GLP’s sales increased 39.2% year-over-year to $4.63 billion for the third quarter ended September 30, 2022. Its gross profit grew 61.7% from the year-ago value to $328.38 million, while its operating income rose 163.2% year-over-year to $141.29 million.
The company’s adjusted EBITDA increased 112.8% year-over-year to $168.51 million. Also, its net income attributable to common limited partners and EPS increased 263.1% and 262.8% year-over-year to $105.95 million and $3.12.
Analysts expect GLP’s EPS and revenue for the quarter ending December 31, 2022, to increase 218.2% and 10.2% year-over-year to $1.40 and $4.51 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 32.3% over the past year to close the last trading session at $30.56.
GLP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It has an A grade for Value and Momentum and a B for Growth and Sentiment. Within the A-rated MLPs - Oil & Gas industry, it is ranked first out of 31 stocks. Click here to see the other ratings of GLP for Stability and Quality.
Sisecam Resources LP (SIRE)
SIRE is engaged in trona ore mining and soda ash production with its facility in the Green River basin of Wyoming. It processes trona ore into soda ash, an essential raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products.
SIRE’s four-year dividend yield is 7.17%, and its current dividend translates to a 9.39% yield. The company’s dividend payouts have grown at a CAGR of 10.6% over the past three years. It paid a quarterly dividend of $0.50 per share on November 17, 2022.
For the fiscal third quarter ended September 30, 2022, SIRE’s net sales increased 40.5% year-over-year to $190.50 million. The company’s operating income rose 295.2% year-over-year to $32.80 million, while its adjusted EBITDA attributable to SIRE increased 69.2% from the year-ago value to $20.30 million.
Also, its net income attributable to SIRE grew 108.1% year-over-year to $15.40 million. In addition, its EPS came in at $0.76, representing an increase of 111.1% from the same quarter last year.
SIRE has gained 26.7% over the past year and 29.2% year-to-date to close the last trading session at $21.31.
SIRE’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Quality and a B for Value, Stability, and Sentiment. Within the A-rated Chemicals industry, it is ranked first out of 87 stocks. To see SIRE’s rating for Momentum, click here.
GLP shares were trading at $32.93 per share on Friday afternoon, up $2.37 (+7.76%). Year-to-date, GLP has gained 52.70%, versus a -15.71% 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.
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