The stubbornly high inflation and the consequent interest rate hikes to tame it has caused significant market volatility this year, hitting most investment portfolios. The stock market is on course to have its worst year since 2008.
The Nasdaq has fared the worst among the three widely followed indices, losing 34.7% this year as investors withdrew from growth stocks due to escalating recession fears. The S&P 500 and Dow have lost 19.7% and 8.5%, respectively.
With inflation still hovering way above the Fed’s 2% target, interest rates are set to rise in 2023, potentially pushing the economy into a recession. Markets are now pricing in 69% odds of a 25-basis point rate hike at the Fed’s February meeting and see rates peaking at 4.94% in the first half of next year.
Since the market volatility is not expected to ease anytime soon, investing in high-yield dividend stocks could act as a defensive layer for one's portfolio. To that end, BHP Group Limited (BHP) and ARC Document Solutions, Inc. (ARC), which offer more than 6% dividend yields, could be wise additions to your portfolio.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP operates as a global resources company. Its segments include Copper, Iron Ore, and Coal. The business is involved in mining iron ore, metallurgical coal, gold, uranium, and other minerals. The corporation also engages in smelting and potash development activities.
On December 12, BHP entered into a comprehensive collaboration agreement with I-Pulse Inc. (I-Pulse) and I-ROX SAS (I-ROX) to identify and develop uses of pulsed-power technology across several facets of the mining sector. BHP will benefit from I-Pulse and I-ROX, adding to its expanding portfolio of options with the potential to enhance the competitiveness of and aid in decarbonizing its current business.
BHP pays a $7.00 per share dividend annually, which translates to an 11.16% yield on the current price. Its dividend has grown at a 37.6% CAGR over the past three years, and its four-year average dividend yield is 7.81%.
For the fiscal year ended June 30, 2022, BHP’s revenue increased 14.4 % year-over-year to $65.10 billion, while its profit from operations grew 33.7% year-over-year to $34.11 billion. Its underlying EBITDA came in at $40.63 billion, up 15.9% year-over-year.
In addition, the company’s underlying attributable profit and underlying basic earnings per ordinary share came in at $23.82 billion and $4.71, increasing 39.5% and 39.4% year-over-year, respectively.
Analysts expect the company’s EPS for the current fiscal year (ending June 2023) to increase 6.6% from the previous year to $5.01. Shares of BHP have gained 4.3% over the past month and 16.1% over the past year to close the last trading session at $61.74.
BHP’s POWR Ratings reflect its strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Value and Quality. Within the Industrial - Metals industry, it is ranked #2 of 35 stocks. To see additional POWR ratings for Growth, Stability, Sentiment, and Momentum for BHP, click here.
ARC Document Solutions, Inc. (ARC)
With 146 service centers, ARC offers digital printing and other document-related services to clients in various industries. Its primary services include the digital printing of standard and specialized business documents as well as the production of customized display graphics in various shapes and sizes.
On December 8, ARC's board of directors declared a quarterly cash dividend of $0.05 per share. The dividend is payable on February 28, 2023, to shareholders of record on January 31, 2023. ARC pays a $0.20 per share dividend annually, which translates to a 7.3% yield on the current price. Its four-year average dividend yield is 2.01%.
For the fiscal 2022 third quarter ended September 30, 2022, ARC’s net sales grew 1% from the previous year’s quarter to $73.14 million, while its gross profit increased 4.3% year-over-year to $24.82 million. Its income from operations rose 16.2% from the year-ago value to $5.72 million.
In addition, the company’s net income came in at $3.71 million, an 18.1% increase year-over-year, and its EPS stood at $0.09, up 28.6% year-over-year.
Shares of ARC have gained 0.7% over the past five days to close the last trading session at $2.72.
ARC’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock also has an A grade for Sentiment, Quality, and Value. Within the Outsourcing - Business Services industry, it has earned the top position among 35 stocks. Click here to see additional ratings of ARC for Growth, Stability, and Momentum.
BHP shares rose $0.18 (+0.29%) in premarket trading Thursday. Year-to-date, BHP has gained 28.08%, versus a -19.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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