Blue-chip companies have a proven history of financial stability and increasing dividend payouts, making them secure choices for investors amid uncertain times. These companies are often household names with an excellent reputation. A wide market reach, superior pricing power, and high liquidity help these businesses perform steadily amid troubled economic conditions.
The Fed Chairman indicated that the final level of interest rates would be higher than expected. This has led many economists to believe that the economy could be in a recession by the start of next year. This could keep the stock market under pressure in the upcoming months.
Given this backdrop, investors could pick blue-chip stocks AbbVie Inc. (ABBV), Honeywell International Inc. (HON), and Lockheed Martin Corporation (LMT) to stabilize their portfolios.
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers a wide range of therapies in the areas of immunology, oncology, neuroscience, eye care, virology, and gastroenterology.
Over the last three years, ABBV’s dividend payouts have grown at a 9.6% CAGR. Its four-year average dividend yield is 4.65%, and its forward annual dividend of $5.92 per share translates to a 3.87% yield.
On October 20, 2022, ABBV announced the acquisition of DJS Antibodies Ltd, a privately-held UK-based biotechnology company. VP and Global Head of Discovery Research at ABBV, Jonathon Sedgwick, Ph.D., said, "This acquisition will deliver new capabilities to enhance our current antibody research activities, an opportunity to strengthen our immunology portfolio, and provide a strong foothold for expanded research efforts in the dynamic bioscience hub in Oxford, UK."
For the fiscal third quarter ended September 30, 2022, ABBV’s net revenues increased 3.3% year-over-year to $14.81 billion. The company’s operating income increased 6.9% year-over-year to $4.60 billion, while its non-GAAP after-tax earnings increased 29.1% year-over-year to $6.53 billion. Moreover, its non-GAAP EPS increased 29.3% from the prior-year quarter to $3.66.
ABBV’s EPS and revenue for the quarter ending December 31, 2022, are expected to increase 10.7% and 3% year-over-year to $3.66 and $15.33 billion, respectively. It has an impressive earnings surprise history, surpassing its consensus EPS estimates in each of the trailing four quarters. The stock has gained 13% year-to-date to close the last trading session at $153.04.
ABBV’s POWR Ratings reflect its strong fundamentals. 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.
Within the Medical - Pharmaceuticals industry, it is ranked #7 out of 162 stocks. The company has an A grade for Quality and a B for Growth and Value.
Click here to see the additional POWR Ratings of ABBV for Momentum, Stability, and Sentiment.
Honeywell International Inc. (HON)
HON is a diversified technology and manufacturing company providing services worldwide. It operates in four segments, Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.
Over the last three years, HON’s dividend payouts have grown at a 5.7% CAGR. Its four-year average dividend yield is 2.37%, and its forward annual dividend of $4.12 per share translates to a 1.91% yield.
On November 1, 2022, HON and Aramco announced the signing of a joint venture agreement to provide a set of end-to-end business process automation solutions under the Aramco Namaat Industrial Investments Program. President and CEO of Honeywell Connected Enterprise, Kevin Dehoff, believes in Aramco's business, operations, technology, and Plant. Digital delivery expertise, coupled with Honeywell's proven experience in industrial software and big data analytics solutions, will unlock tremendous value for the industry.
HON’s net sales for the third quarter ended September 30, 2022, increased 5.6% year-over-year to $8.95 billion. The company’s net cash provided by operating activities increased 86.1% from the year-ago period to $2.08 billion. Its non-GAAP net income attributable to HON increased 7.8% year-over-year to $1.53 billion. Additionally, its non-GAAP EPS came in at $2.25, representing an 11.4% increase from the prior-year period.
Analysts expect HON’s EPS and revenue for the quarter ending December 31, 2022, to increase 20% and 6.9% year-over-year to $2.51 and $9.25 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 23.7% over the past month to close the last trading session at $215.43.
HON’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. It is ranked #13 out of 80 stocks in the B-rated Industrial - Machinery industry. It has a B grade for Growth, Stability, Sentiment, and Quality.
We have also given HON grades for Value and Momentum. Get all HON ratings here.
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company engaging in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
Over the last three years, LMT’s dividend payouts have grown at an 8.4% CAGR. Its four-year average dividend yield is 2.62%, and its forward annual dividend of $12 per share translates to a 2.57% yield.
On October 12, 2022, LMT and Ayar Labs, a leader in chip-to-chip optical connectivity, announced a strategic collaboration to develop future sensory platforms. This will leverage Ayar Labs’ advanced optical I/O microchips that use light to transfer data faster, at lower latency, and at a fraction of the power of existing electrical I/O solutions.
LMT’s total assets for the fiscal third quarter ended September 25, 2022, increased 2.3% to $52.03 billion, compared to $50.87 billion for the fiscal year ended December 31, 2021. Its net sales increased 3.5% year-over-year to $16.58 billion, while its net earnings increased 189.6% year-over-year to $1.78 billion. In addition, its non-GAAP EPS came in at $6.87, representing a 4.1% from the prior-year quarter.
Analysts expect LMT’s EPS and revenue for the quarter ending December 31, 2022, to increase 1.7% and 3.1% year-over-year to $7.37 and $18.27 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 31.5% year-to-date to close the last trading session at $467.25.
LMT’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of B, which equates to a Buy in our proprietary rating system. It is ranked #4 out of 74 stocks in the Air/Defense Services industry. In addition, it has a B grade for Value and Quality.
Click here to see the ratings of LMT for Growth, Momentum, Stability, and Sentiment.
ABBV shares were trading at $151.76 per share on Wednesday afternoon, down $1.28 (-0.84%). Year-to-date, ABBV has gained 16.45%, versus a -15.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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