Investors’ concerns over the looming interest rate hike are influencing the performance of the benchmark stock indexes. As high inflation is projected to persist for an extended period, the central bank will likely aggressively raise the benchmark interest rates this year.
Therefore, investors looking to dodge the market volatility could invest in dividend-yielding stocks to ensure a steady income stream. Wharton finance professor Jeremy Siegel believes that the investor sentiment will be stable enough while foreseeing the S&P 500 rising 9% in 2022. Emphasizing dividend stocks, he stated, “dividend stocks are protected against inflation because firms have been able to raise their prices, their cashflows, and increase their dividends.”
Given this backdrop, quality dividend-yielding stocks AbbVie Inc. (ABBV), Philip Morris International Inc. (PM), and Vector Group Ltd. (VGR) could be solid picks now. These stocks are rated ‘Buy’ in our proprietary POWR Ratings system.
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company’s key therapeutic areas include immunology, oncology, neuroscience, eye care, virology, women's health, and gastroenterology.
On October 29, 2021, Richard A. Gonzalez, chairman and CEO, ABBV, said, "Based upon our strong momentum, we are increasing our full-year 2021 EPS guidance. We remain highly confident in AbbVie's long-term outlook and are once again raising our dividend, which has grown over 250 percent since inception."
Over the last five years, ABBV’s dividend payout has grown at a 17.71% CAGR. While the four-year average dividend yield for ABBV is 4.52%, its current dividend translates to a 4.15% yield. ABBV recently announced an increase in the company's quarterly cash dividend from $1.30 per share to $1.41 per share, payable on February 15, 2022.
ABBV’s net revenues came in at $14.34 billion for the third quarter ended September 30, 2021, up 11.2% year-over-year. Its net earnings increased 37.5% year-over-year to $3.18 billion, and its adjusted EPS came in at $3.33, up 17.7% year-over-year.
Analysts expect ABBV’s revenue to increase 22.8% year-over-year to $56.22 billion in fiscal 2021. Its EPS is expected to grow at 20% to $12.67 in fiscal 2021. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 21.7% to close Friday’s trading session at $135.87.
ABBV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ABBV has a B grade for Growth, Value, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #11 out of 190 stocks. Click here to see the additional POWR Rating for Momentum, Stability, and Sentiment for ABBV.
Philip Morris International Inc. (PM)
PM manufactures and sells cigarettes, other nicotine-containing products, smoke-free products, and related electronic devices and accessories. It markets and sells its products in the European Union, Eastern Europe, the Middle East, Africa, South and Southeast Asia, East Asia, Australia, Latin America, and Canada.
On October 19, 2021, Jacek Olczak, Chief Executive Officer, said, “We confirm our confidence in our 2021 to 2023 growth targets, despite device constraints that could persist into the first half of 2022, with temporarily lower IQOS user growth rates.”
PM has increased its annual dividend every year since becoming a public company in 2008. Over the last three years, PM’s dividend payout has grown at a 2.96% CAGR. Its current dividend translates to a 4.84% yield. Also, its four-year average yield is 5.48%. On December 9, 2021, PM declared a regular quarterly dividend of $1.25 per common share, payable on January 10, 2022.
For the fiscal third quarter ended September 30, 2021, PM’s net revenues came in at $8.12 billion, up 9.1% year-over-year. Its net earnings increased 6.2% year-over-year to $2.59 billion. In addition, its EPS came in at $1.55, up 4.7% year-over-year.
PM’s revenue is expected to come in at $31.24 billion in fiscal 2021, representing an 8.9% year-over-year rise. The company’s EPS is expected to increase 17% year-over-year to $6.05 in fiscal 2021. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 27.4% to close Friday’s trading session at $103.38.
It’s no surprise that PM has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B grade for Stability.
PM is ranked #4 out of 11 stocks in the B-Rated Tobacco industry. Click here to see the additional POWR Ratings for PM (Growth, Value, Momentum, and Sentiment).
Vector Group Ltd. (VGR)
VGR, through its subsidiaries, manufactures and sells cigarettes in the United States. It operates in two segments, Tobacco and Real Estate. It is a constituent of the S&P SmallCap 600 Index and the Russell 2000 Index.
On November 8, 2021, Howard M. Lorber, President and CEO, VGR, said, “We are excited by the continued strong performance of our tobacco business which validates our market strategy and reflects the competitive advantages we have in the deep discount segment.”
VGR’s four-year average dividend yield is 6.55%, while its current dividend translates to a 4.42% yield. On November 30, 2021, VGR declared a regular quarterly cash dividend of $0.20 per share on its common stock.
VGR’s total revenues increased 19.1% year-over-year to $652.65 million for the fiscal third quarter ended September 30, 2021. The company’s net income came in at $48.77 million, up 27.9% year-over-year, and its EPS came in at $0.32, up 28% year-over-year.
For fiscal 2021, analysts expect VGR’s revenue to be $2.53 billion, representing a 26.6% year-over-year rise. In addition, the company’s EPS is expected to increase 94.5% year-over-year to $1.77 in fiscal 2021. Also, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock closed Friday’s trading session at $11.70.
VGR’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Value, and Quality.
Click here to see VGR’s rating for Momentum, Stability, and Sentiment as well. VGR is ranked #1 of 11 stocks in the Tobacco industry.
ABBV shares fell $0.01 (-0.01%) in premarket trading Wednesday. Year-to-date, ABBV has gained 2.06%, versus a -3.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
3 Buy-Rated Stocks Yielding More than 4% StockNews.com
