Retail sales in the United States decreased by 1.1% in December 2022, while manufacturing output fell by 1.3%, suggesting weakening economic development.
However, according to the Commerce Department’s report, the US economy demonstrated its strength with a better-than-expected GDP growth rate of 2.9% in the fourth quarter of 2022. Despite bearing the brunt of the Federal Reserve’s consecutive interest-rate hikes, the U.S. economy maintained stable growth.
In addition, President Biden dismissed recession possibilities with the U.S. economy’s 2022 fourth-quarter GDP growth. The strong labor market, historically low unemployment rate, and the declines in inflation during recent months are raising the possibility of the economy achieving a soft landing.
However, as uncertainties remain, investors could consider buying fundamentally sound stocks Johnson & Johnson (JNJ) and The Coca-Cola Company (KO), which are paying solid dividends. Also, these stocks have a steady dividend-paying record and might help create lasting generational wealth.
Johnson & Johnson (JNJ)
JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.
On December 22, 2022, JNJ acquired Abiomed Inc. (ABMD), a world leader in breakthrough heart, lung, and kidney support technologies. With this acquisition, JNJ is expected to engage in extensive research and development in cardiology, lung, and kidney-related ailments.
JNJ has paid dividends for 60 consecutive years. Over the last three years, JNJ’s dividend payouts have grown at a 5.9% CAGR. While JNJ’s four-year average dividend yield is 2.60%, its current dividend translates to a 2.69% yield.
JNJ’s consumer health segment revenue came in at $3.77 billion for the fiscal year 2022 fourth quarter, up marginally year-over-year. Moreover, its adjusted net earnings came in at $6.22 billion, representing a 9.5% year-over-year increase. Its EPS increased 10.3% year-over-year to $2.35.
JNJ’s revenue is expected to increase 2.8% year-over-year to $97.64 billion in 2023. Its EPS is expected to grow 3.4% year-over-year to $10.50 in 2023. It surpassed EPS estimates in all four trailing quarters. JNJ’s shares have lost marginally intraday to close the last trading session at $168.23.
JNJ’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JNJ has a B for Value, Stability, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #4 out of 170 stocks. Click here for the additional POWR Ratings for Sentiment, Growth, and Momentum for JNJ.
The Coca-Cola Company (KO)
Famous beverage company KO manufactures, markets, and sells various non-alcoholic beverages worldwide. It provides sparkling soft drinks, enhanced water, juice, dairy, and syrups.
On October 25, 2022, James Quincey, Chairman and CEO, said, “Our business is resilient amidst a dynamic operating and macroeconomic environment. We are investing in our strong portfolio of brands, which is a cornerstone of our ability to deliver long-term value for our stakeholders.”
KO has paid dividends for 60 consecutive years. Over the last three years, KO’s dividend payouts have grown at a 3.2% CAGR. While KO’s four-year average dividend yield is 3.06%, its current dividend translates to a 2.91% yield.
KO’s net operating revenues increased 10.2% year-over-year, for the fiscal 2022 third quarter ended September 30, 2022, to $11.05 billion. Its operating income came in at $3.09 billion, up 6.6% year-over-year. The company’s gross profit grew 7.1% year-over-year to $6.50 billion.
Analysts expect KO’s revenue to increase 3.6% year-over-year to $44.31 billion in 2023. Its EPS is expected to grow 2.4% year-over-year to $2.55 in 2023. It surpassed EPS estimates in all four trailing quarters. The stock has gained marginally over the past year to close the last trading session at $60.49.
KO’s overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B for Stability and Quality. The stock is ranked #17 out of 35 stocks in the A-rated Beverages industry. We’ve also rated KO for Momentum, Value, and Growth. Get all the KO ratings here.
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JNJ shares were trading at $163.12 per share on Monday afternoon, down $5.11 (-3.04%). Year-to-date, JNJ has declined -7.66%, versus a 5.11% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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