Technical analyst Larry Williams sees the potential for the market to end strong this year. However, after the Federal Reserve’s chair Jerome Powell expressed the Fed’s commitment to bring down inflation with its rate hikes, experts believe there is still a long way to go before a reversal in tightening monetary policy.
Moreover, the Fed’s harsh treatment of inflation and aim of reducing it to the desired 2% is expected to perpetuate volatility into mid-2023. Mark Haefele, UBS Global Wealth Management's chief investment officer, does not see a major recession in the United States due to the Fed’s actions but expects an additional 100 basis points rate hike this year.
In this uncertain economic environment, we believe iShares MSCI Brazil ETF (EWZ) and stocks ICL Group Ltd (ICL), Alliance Resource Partners, L.P. (ARLP), and Global Partners LP (GLP), which provide dividends yielding more than 6%, could be ideal additions to one’s portfolio to generate a steady income stream.
ETF to Buy
iShares MSCI Brazil ETF (EWZ)
EWZ offers exposure to Brazilian equities. The underlying MSCI Brazil 25/50 Index is a free float-adjusted market capitalization-weighted index designed to measure the performance of the Brazilian equity market's large- and mid-cap segments.
EWZ has $5.56 billion in net assets and a NAV of $32.35 as of August 29. The fund has an expense ratio of 0.57% compared to the category average of 0.51%. Its net flows came in at $940.63 million over the past year and $133.25 million over the past six months.
As of August 26, EWZ’s top holdings include Vale S.A. (VALE3) with a 14.53% weight, Petroleo Brasileiro SA Pfd (PETR4) with an 8.24% weight, and Petroleo Brasileiro SA (PETR3) with a 7.15% weight. EWZ’s trailing-12-month dividend of $3.64 yields 11.38% on prevailing prices. Its dividend payouts have increased at a 48.8% CAGR over the past three years and a 40.2% CAGR over the past five years.
The fund has gained 15% year-to-date and 11.3% over the past month to close its last trading session at $32.29.
EWZ’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The ETF has an A grade for Trade and a B for Buy & Hold and Peer. It is ranked #3 in the 19-ETF Latin America ETFs group. The group is rated B.
Click here to see the additional POWR Ratings for EWZ.
Stocks to Buy
ICL Group Ltd (ICL)
ICL is a specialty mineral and chemicals firm operating worldwide through the segments of Industrial Products, Potash, Phosphate Solutions, and Innovative Ag Solutions (IAS).
On August 17, ICL and computational biology company Evogene Ltd. (EVGN) announced today a multi-year, strategic collaboration agreement between ICL and Lavie Bio Ltd., a subsidiary of EVGN. This collaboration to develop novel bio-stimulant products might benefit the company.
On July 20, ICL and ag-biotech company PlantArcBio, Ltd. announced the development of a novel bio-stimulant technology platform, which is expected to improve crop yields while having a minimal environmental impact. Hadar Sutovsky, vice president of External Innovation and general manager of ICL Planet, said, "This aligns perfectly with ICL's long-term goal of creating impact and sustainable growth in the agriculture end-market, alongside ensuring food security."
In July, ICL declared a dividend of 29.18 cents per share in connection with the second quarter. The dividend is payable to shareholders on September 14. Its annual dividend of $1.17 yields 10.87% on prevailing prices. The company’s dividend payouts have increased at CAGRs 55.1% over the past three years and 95.7% over the past five years.
For the fiscal second quarter that ended June 30, ICL’s sales increased 78.1% year-over-year to $2.88 billion. Adjusted net income attributable to shareholders rose 456.3% from the prior-year quarter to $751 million. EPS attributable to shareholders of the company improved 300% from the same period the prior year to $0.44.
The consensus EPS estimate of $0.46 for the third quarter ending September 2022 indicates a 178.2% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $2.66 billion reflects an improvement of 48.6% from the prior-year period.
The stock has gained 51.3% over the past year and 16.2% over the past month to close its last trading session at $10.56.
ICL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
ICL has a Growth grade of A and a Value, Momentum, Sentiment, and Quality grade of B. In the 31-stock Agriculture industry, it is ranked #1.
Click here to see the additional POWR Ratings for ICL (Stability).
Alliance Resource Partners, L.P. (ARLP)
ARLP is a diversified natural resource company that primarily produces and sells coal to utilities and industrial users. The company operates through four segments: Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties, and Coal Royalties.
On July 26, ARLP declared an increased dividend of $0.40 per unit for the quarter that ended June 30, which was payable to unitholders on August 12. This cumulates to an annual dividend of $1.60 and yields 6.30% on prevailing prices.
ARLP’s total revenues increased 70.1% year-over-year to $616.50 million in the quarter that ended June 30. Net income attributable to ARLP and earnings per limited partner unit improved 266.7% and 261.8% from the prior-year period to $161.48 million and $1.23.
Analysts expect ARLP’s EPS to increase 206.1% year-over-year to $1.50 for the quarter ending September 2022. Likewise, Street expects revenue for the same quarter to improve 60.9% from the prior-year quarter to $668.32 million.
Over the past year, ARLP has gained 209.4% to close its last trading session at $26.30. It has gained 108.1% year-to-date.
It’s no surprise that ARLP has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Sentiment and a B grade for Growth, Momentum, and Quality. It is ranked #3 out of the nine stocks in the MLPs – Other industry. The industry is rated A.
To see the additional POWR Ratings for Value and Stability for ARLP, click here.
Global Partners LP (GLP)
GLP purchases, sells, gathers, stores, and transports gasoline and gasoline blendstocks, distillates, residual oil, renewable fuels, crude oil, and propane. The company also engages in the transportation of petroleum products and renewable fuels through rail from the mid-continent region of the United States and Canada.
On July 26, GLP announced a quarterly distribution of $0.6050 per unit, which was payable on August 12. Its annual dividend of $2.42 yields 8.20% on prevailing prices. The company’s dividend payouts have increased at a CAGR of 5.7% over the past three years and a 5% CAGR over the past five years.
For the fiscal second quarter that ended June 30, GLP’s sales increased 62.3% year-over-year to $5.32 billion. Net income attributable to common limited partners and net income per common limited partner unit came in at $157.18 million and $4.61, up 1,908.2% and 1,904.3% from the same period the prior year.
Street EPS estimate for the current year (fiscal 2022) of $7.17 indicates a 447.3% year-over-year rise. Likewise, Street revenue estimate for the same year to $18.58 billion reflects an increase of 40.30% from the prior year. Moreover, GLP has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
GLP’s shares have gained 46% over the past year and 25.6% year-to-date to close its last trading session at $29.50.
This promising prospect is reflected in GLP’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
GLP has a Value and Momentum grade of A and a Sentiment grade of B. In the 34-stock MLPs – Oil & Gas industry, it is ranked #2. The industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see GLP ratings for Growth, Stability, and Quality here.
About the Author: Anushka Dutta
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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