3 Top Dividend Aristocrats to Buy in December

Global stock markets were upbeat in the last trading session on December 8 due to the fading fears about the omicron variant of the coronavirus. Moreover, the United States 10-year Treasury yield has also edged higher for a third straight day, rising above 1.5% for the first time in the week. However, the World Health Organization (WHO) also warned that it is too early to understand the severity of the new variant and the effectiveness of the current vaccines against it. “There is a suggestion that there is increased transmissibility,” WHO official Maria Van Kerkhove said.

Even if the stock market edged higher, the market volatility is apparent. CBOE Volatility Index (VIX) is up more than 15% over the month. Additionally, slow job growth in November is not likely to deter the Fed’s plan of an interest rate hike next year.

Investors looking to hedge against the market volatility and secure a stable stream of income could invest in these high-yielding dividend stocks of AbbVie Inc. (ABBV), AT&T Inc. (T), and Cardinal Health Inc. (CAH). These stocks are positioned in the current S&P 500 dividend aristocrats list.

AbbVie Inc. (ABBV)

ABBV engages in the discovery, development, manufacture, and sale of pharmaceuticals worldwide. The company’s offerings include pharmaceutical products such as autoimmune and intestinal disease therapy, HUMIRA, adult plaque psoriasis treatment, SKYRIZI, and adult rheumatoid arthritis treatment, RINVOQ.

On December 8, Allergan, an ABBV company, announced that its product VUITY™, the first U.S. Food and Drug Administration (FDA) approved eye drop to treat presbyopia, is now available by prescription in pharmacies nationwide. This should add to the company’s revenue stream.

On December 6, ABBV announced positive top-line results from its U-EXCEED phase-3 induction study regarding the usage of Upadacitinib (RINVOQ®) to treat Crohn’s disease. This demonstrates the company’s expertise and should enable the company to cater to patients with this disease.

ABBV declared a quarterly dividend of $1.41, payable on February 15, 2022. Its annual dividend of $5.64 yields 4.63% on the current price. The company’s dividend payouts have increased at a CAGR of 13.2% over the past three years and 17.9% over the past five years. In addition, the company has a record of eight years of consecutive dividend growth.

For the fiscal third quarter ended September 30, ABBV’s net revenues increased 11.2% year-over-year to $14.34 billion. Non-GAAP earnings after tax improved 17.9% from the prior-year quarter to $5.95 billion. Non-GAAP EPS rose 17.7% from the same period last year to $3.33.

The consensus EPS estimate of $3.29 for the current quarter (ending December 2021) indicates a 12.7% year-over-year increase. Likewise, the consensus revenue estimate for the ongoing quarter of $15.01 billion reflects a rise of 8.3% from the prior-year quarter. Moreover, ABBV has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.

The stock has gained 13.2% over the past year, 13.7% year-to-date to close yesterday’s trading session at $121.87.ABBV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ABBV has a Growth, Value, Sentiment, and Quality of B. In the 195-stock Medical – Pharmaceuticals industry, it is ranked #9. Click here to see the additional POWR Ratings for ABBV (Stability and Momentum).

AT&T Inc. (T)

T is a telecommunication, media, and telecommunication services, global provider. The company operates through Communications; WarnerMedia; and Latin America segments. It operates AT&T, Cricket, and DIRECTV brand names, HBO Max and HBO Go platforms, and HBO and Cinemax pay-television services.

On December 7, it was reported that T would consolidate the United States Coast Guard's (USCG) disparate data communications networks onto a single modernized data communications platform as per a Task Order from the Defense Information Technology Contracting Organization. The venture might prove to be profitable for the company.

On November 17, T launched an integrated cybersecurity solution for Federal Agencies to protect their IT infrastructure. About this launch, Brandon Pearce, AVP, Product Marketing Management, AT&T, said, “The shift to telework and increased cyber threats have created urgency for federal agencies to enhance the security of their IT infrastructure. AT&T Government Trusted Internet helps federal employees efficiently connect to remote agency networks and cloud environments in a highly secure manner while continually managing risks.”

On September 23, T declared a quarterly dividend of $0.52 which was payable to shareholders on November 1, and which cumulates to an annual dividend of $2.08 and yields 8.98% on the current price. The company’s dividend payouts have increased at a CAGR of 1.3% over the past three years and a CAGR of 1.6% over the past five years.

T’s adjusted operating income increased 2.5% year-over-year to $8.41 billion in the fiscal third quarter ended September 30. Net income attributable to common stock came in at $5.87 billion, up 112.5% from the same period last year, while adjusted EPS rose 14.5% from the prior-year quarter to $0.87.Analysts expect T’s EPS to increase 5.3% year-over-year to $3.35 in the current year (fiscal 2021). In addition, T has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.

T’s shares have gained marginally intraday to close yesterday’s trading session at $23.17.

It’s no surprise that T has an overall B rating, which translates to Buy in our POWR Rating system. T has a Value grade of B. It is ranked #3 out of the 20 stocks in the Telecom – Domestic industry.

To see the additional POWR Ratings for Growth, Momentum, Stability, Sentiment, and Quality for T, click here.

Cardinal Health, Inc. (CAH)

CAH is an integrated healthcare service and products company that operates through the two broad segments of Pharmaceutical and Medical. The company primarily operates in the United States, Canada, Europe, and Asia, providing customized solutions for hospitals, pharmacies, clinical laboratories, and patients at home.

On November 18, CAH announced that its business, WaveMark™, would be available for implementation in clinical labs in the U.S. This launch is expected to improve its testing services and enhance its supply-chain efficiency.

On November 16, the company announced its collaboration with an instant logistics company, Zipline, to offer on-demand autonomous aircraft delivery to pharmacies. The operation is expected to mitigate risks of inventory stock-outs and should bolster the company’s distribution services.

On November 4, CAH declared a quarterly dividend of $0.4908 per share, payable on January 15, 2022. Its annual dividend of $1.96 yields 4.07% on the current price. The company’s dividend payouts have increased at a CAGR of 1.3% over the past three years and 3.2% over the past five years. In addition, the company has a record of 25 years of consecutive dividend growth.

For the fiscal first quarter ended September 30, CAH’s revenue increased 12.6% year-over-year to $43.97 billion. Net earnings and EPS attributable to CAH stood at $271 million and $0.94, up substantially from their negative year-ago values.

Street EPS estimate for the ongoing year (fiscal 2022) of $5.72 indicates an improvement of 2.7% from the prior year. Likewise, Street revenue estimate of $177.93 billion for the current year reflects a 9.5% year-over-year rise.

Over the past five days, the stock has gained 3% to close yesterday’s trading session at $48.25.

CAH’s promising prospects are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. CAH has an A grade for Value. It is ranked #21 out of the 85 stocks in the Medical – Services industry.

In addition to the POWR Rating grades we’ve stated above, one can see CAH ratings for Growth, Momentum, Stability, Sentiment, and Quality here.

ABBV shares were trading at $124.15 per share on Thursday afternoon, up $2.28 (+1.87%). Year-to-date, ABBV has gained 21.42%, versus a 25.95% rise in the benchmark S&P 500 index during the same period.

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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