Fed minutes show a majority of officials believe the pace of interest rate hikes will be slowed down soon. Irrespective, policymakers believe that rates will settle at levels “somewhat higher than they had previously expected.” According to Fed Chair Jerome Powell, interest rates need to rise higher than forecasts until they reach a “sufficiently restrictive” level.
On the other hand, new data shows signs of a cooling labor market and contracting business activities, pointing towards a weakening momentum for the economy. Moreover, Federal Reserve staff economists see a 50% chance of a recession next year amid slower consumer spending, global economic risks, and further interest-rate hikes.
Thus, it could be wise to invest in fundamentally sound dividend-paying stocks, Bristol-Myers Squibb Company (BMY) and ARC Document Solutions, Inc. (ARC), for steady passive income.
Bristol-Myers Squibb Company (BMY)
BMY engages in discovering, developing, licensing, manufacturing, and selling biopharmaceutical products globally. The company’s offerings include products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.
On November 10, BMY announced that Health Canada approved CAMZYOS™ (mavacamten capsules) for treating adults with Symptomatic Obstructive Hypertrophic Cardiomyopathy (oHCM).
CAMZYOS™ is the first Canadian-approved allosteric and selective cardiac myosin inhibitor that targets the underlying pathophysiology of oHCM. This should help the company provide a new treatment option to patients and thus expand its revenue stream.
On November 1, BMY paid its quarterly dividend of $0.54 per share. The company pays a $2.16 per share dividend annually, which yields 2.74%. It has a record of six consecutive years of dividend growth.
In the fiscal third quarter ended September 30, BMY’s EBIT increased 2.4% year-over-year to $2.21 billion. The company’s net earnings amounted to $1.61 billion, up 3.6% year-over-year, while the non-GAAP EPS improved 3.1% from the prior-year quarter to $1.99.
Analysts expect BMY’s EPS for the fiscal second quarter ending June 2023 to be $2.07, indicating a 7.4% year-over-year growth. The company’s revenue is expected to increase by 1% from the prior year to $12 billion in the same period. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, BMY has gained 37.8% to close its last trading session at $79.14. The stock has gained 26.9% year-to-date.
BMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Value and a B for Stability, Sentiment, and Quality. It is ranked #3 of 162 stocks in the Medical – Pharmaceuticals industry.
Beyond what we’ve stated above, we have also given BMY grades for Growth and Momentum. Get all BMY ratings here.
ARC Document Solutions, Inc. (ARC)
ARC, a digital printing company, provides digital printing and document-related services in the United States. It provides managed print services, cloud-based document management software, and other digital hosting services. The company also offers professional and software services to re-produce and distribute documents of different formats and specialized graphic color printing.
The company declared a quarterly dividend of $0.05, payable to its shareholders on November 30, 2022. ARC has a four-year dividend yield of 1.86%. Its current annual dividend of $0.20 translates to a 6.6% yield.
For the fiscal third quarter ended September 30, 2022, ARC’s net sales came in at $73.10 million, increasing marginally year-over-year. Adjusted net income attributable to ARC increased 15.6% year-over-year to $3.70 million, while its adjusted EPS came in at $0.09, representing a 12.5% increase from the prior-year quarter.
ARC beat the consensus EPS estimates in all four trailing quarters, which is commendable. Over the past month, the stock has gained 33% to close the last trading session at $3.02.
ARC’s POWR Ratings reflect this positive outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It also has an A grade for Value, Sentiment, and Quality and a B for Stability. Out of the 44 stocks in the B-rated Outsourcing - Business Services industry, ARC is ranked #1.
Click here to see the other ratings of ARC for Growth and Momentum.
BMY shares were trading at $79.14 per share on Thursday afternoon, up $0.28 (+0.36%). Year-to-date, BMY has gained 30.87%, versus a -14.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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