The stock market’s gyrations are being amplified amid the uncertainties surrounding the Ukraine-Russia war, the Fed’s interest rate increases, deepening supply chain constraints, and the recent resurgence of COVID-19 cases. Furthermore, rising inflation is making investors anxious. “It will be a much more tricky, difficult year when it comes to the economy and people’s finances,” said Mark Zandi, Moody’s Analytics’ chief economist.
Considering the volatile environment, investing in large-cap stocks with high dividend yields can help hedge some of the market risks. Large-cap stocks are known for their stable returns during inflationary periods and could be ideal investments. These companies’ larger market reach and pricing power enable them to perform steadily regardless of market fluctuations.
Given this backdrop, we think large-cap stocks Verizon Communications Inc. (VZ), W. P. Carey Inc. (WPC), and Takeda Pharmaceutical Company Limited (TAK), which each yield 5%, could be ideal additions to one’s portfolio now.
Verizon Communications Inc. (VZ)
New York City-based VZ offers communication, information, and entertainment products and services to consumers, businesses, and governmental agencies. The company operates through two segments: Consumer Group; and Business Group, providing wireless and wireline communications services and products in the U.S. It has a market capitalization of $207 billion.
On March 03, VZ announced the acceleration of the 5G Ultra-Wideband network to an expected 175 million people by the end of 2022 through ultra innovations with its new content and entertainment hub, strategic partnership with Meta Platforms, Inc. (FB), and the launch of a new private networking solution for business customers.
The company paid a $0.64 quarterly dividend on May 2, 2022, to its shareholders. VZ pays $2.56 as dividends annually, yielding 5.15% on the current price.
During the first quarter, ended March 31, 2022, VZ’s total revenue increased 2.1% year-over-year to $33.6 billion. Its operating income rose marginally from its year-ago value to $7.80 billion. In addition, VZ reported 229,000 total broadband net additions–its best quarter in over a decade–and 194,000 fixed wireless net additions, which is 2.5 times the previous quarter.
The $5.41 consensus EPS estimate for its fiscal 2022 (ending December 31) represents a marginal improvement year-over-year. The $136.84 billion consensus revenue estimate for the current year indicates a 2.4% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past five days, the stock has gained marginally to close yesterday’s trading session at $49.67.
VZ’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
VZ also has a B grade for Stability. Within the Telecom - Domestic industry, it is ranked #4 of 21 stocks. To see additional POWR Ratings for Growth, Value, Momentum, Sentiment, and Quality for VZ, click here.
- P. Carey Inc. (WPC)
WPC in New York City is one of the largest net lease real estate investment trusts (REITs) operating through two segments: Real Estate; and Investment Management. The company owns commercial real estate, which includes single-tenant industrial, warehouse, office, retail, and self-storage facilities. Its portfolio consists of approximately 1,266 properties net-leased to approximately 356 tenants, full or partial ownership interests in nearly 20 operating properties, including 19 self-storage properties and one hotel. It has a market capitalization of $15.54 billion.
On May 19, WPC was named Green Lease Leader at the GOLD level by the Institution for Market Transformation (IMT) and the U.S. Department of Energy’s (DOE) Better Buildings Alliance. This reflects the company’s strong performance towards its sustainability goals.
In February, the company proposed plans to acquire Corporate Property Associates 18 (CPA:18). This transaction is expected to add a well-diversified net lease portfolio and attractive operating self-storage assets with solid growth potential.
On March 10, WPC’s board of directors declared an 0.86% increase in the company’s quarterly cash dividend to $1.06, paid on April 14, 2022. WPC pays $4.23 as dividends annually, yielding 5.19% on its current share price.
WPC’s revenues increased 12% year-over-year to $348.44 million in the first quarter ended March 31, 2022. The company’s net income increased 204.3% from its year-ago value to $157 million, while its EPS rose 100% from the prior-year quarter to $0.82.
Analysts expect WPC’s FFO and revenue to increase 2.8% and 7.7%, respectively, year-over-year to $1.23 and $344.38 million in its fiscal second quarter (ending June 2022). WPC has surpassed the consensus FFO estimates in each of the trailing four quarters, which is impressive. WPC has gained 8.7% over the past year.
WPC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B, which equates to Buy in our proprietary rating system. WPC also has a B grade for Growth, Momentum, Stability, and Sentiment. Among the 51 stocks in the REITs - Diversified industry, it is ranked #12. Click here to see the additional POWR Ratings for WPC (Value and Quality).
Takeda Pharmaceutical Company Limited (TAK)
Headquartered in Japan, TAK researches, develops, manufactures, and sells pharmaceutical products, general medical products, quasi-drugs, and healthcare products globally. Its offerings are concentrated in the areas of gastroenterology, oncology, neuroscience, rare diseases, as well as plasma-derived therapies, and vaccines. It has a market capitalization of $46.44 billion.
TAK pays $0.80 as dividends annually, yielding 5.46% on the current price.
On April 22, the company reported a new exploratory analysis of patients treated with LIVTENCITY (Maribavir). The study showed reductions in hospitalization rates and length of hospital stay.
On April 19, TAK received approval from the Japan Ministry of Health, Labour and Welfare (MHLW) for Nuvaxovid, a novel recombinant protein-based COVID-19 vaccine, for primary and booster immunization in individuals aged 18 and older, which should boost its revenues in the near term.
In its fiscal year 2021 (ended March 31, 2022) TAK’s net revenue increased 11.6% year-over-year to ¥3.57 trillion ($27.87 billion). Its non-IFRS net profit increased 1.3% from its year-ago value to ¥663.70 billion ($5.18 billion), while its non-IFRS EPS came in at ¥425, representing a 1.2% year-over-year improvement.
Analysts expect TAK’s revenues to increase 375.5% year-over-year to $27.97 billion in its fiscal year 2022 (ending March 31, 2023). It is no surprise the company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent. Shares of TAK have risen 9.9% in price year-to-date to close yesterday’s trading session at $14.98.
TAK has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Value and a B grade for Stability. Also, it is ranked #24 of 167 stocks in the Medical - Pharmaceuticals industry.
In addition to the POWR Ratings grades I have just highlighted, you can see the TAK ratings for Growth, Momentum, Sentiment, and Quality here.
Click here to checkout our Healthcare Sector Report for 2022
VZ shares were trading at $49.81 per share on Tuesday afternoon, up $0.14 (+0.28%). Year-to-date, VZ has declined -1.80%, versus a -17.15% 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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