The Federal Reserve’s indication to continue raising interest rates and economic slowdown in many other nations have been driving market volatility. “The combination of peak hawkishness from the Fed and the frustratingly slow pace at which inflation is cooling could make this a tough month,” said LPL Chief Equity Strategist Jeffrey Buchbinder.
As this uncertainty is not expected to ease anytime soon, investing in relatively stable, dividend-paying, large-cap stocks could be wise to reduce your portfolio risks. One could consider investing in stocks possessing these qualities for generating stable returns for decades.
Low beta, high profitability, and impressive dividend payouts make Microsoft Corporation (MSFT), Walmart Inc. (WMT), The Coca-Cola Company (KO), and Abbott Laboratories (ABT) solid picks on that front. So, one could consider buying and holding them for the next decade.
Microsoft Corporation (MSFT)
MSFT develops, supports, licenses, and sells software products, services, and solutions worldwide. It also manufactures and sells PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories through OEMs, distributors, resellers, digital marketplaces, and retail stores. It has a 0.93 beta.
MSFT will pay a $0.62 quarterly cash dividend on September 8, 2022. The stock pays a $2.48 per share dividend annually, translating to a 0.95% yield. The company’s dividend has grown at a 9.7% rate over the past five years. MSFT has increased its dividends for 17 consecutive years.
On August 9, 2022, British multinational universal bank Barclays Bank PLC announced the deployment of MSFT’s Microsoft Teams as its preferred collaboration platform.
This will enable Barclays to connect its employees better and enhance the data retention, search, and retrieval capabilities available within Microsoft Purview to meet its needs. This should help MSFT nurture a long-term partnership with Barclays in the long run.
For its fiscal 2022 fourth quarter ended June 30, 2022, MSFT’s total revenue increased 12.4% year-over-year to $51.87 billion. The company’s gross profit came in at $35.44 billion, up 10.2% from the prior-year period. Its operating income came in at $20.53 billion for the quarter, representing a 7.5% rise from the prior-year period.
While its net income increased 1.7% year-over-year to $16.74 billion, its EPS increased 2.8% to $2.23. As of June 30, 2022, the company had $13.93 billion in cash and cash equivalents.
Analysts expect the company’s EPS to come in at $10.13 for its fiscal 2022 ending June 30, 2023, representing a 10% rise from the prior-year period. It surpassed Street EPS estimates in three of the trailing four quarters.
The consensus revenue estimate of $220.82 billion for the same fiscal year represents an 11.4% year-over-year improvement. Its EPS is expected to grow at a rate of 15.4% per annum over the next five years.
Its 47.2% trailing-12-month ROE is 547.3% higher than the 7.3% industry average. The company’s trailing-12-month ROA of 19.9% is 625.6% higher than the industry average of 2.8%. Over the past week, the stock has lost 2.5% to close the last trading session at $260.40.
MSFT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Stability and Quality. Click here to see the additional ratings for MSFT’s Growth, Value, Sentiment, and Momentum.
MSFT is ranked #11 of 53 stocks in the Software - Business industry.
Walmart Inc. (WMT)
WMT operates retail, wholesale, supermarkets, other units, and e-commerce websites worldwide. The company operates through Walmart U.S.; Walmart International; and Sam’s Club. It also offers fuel and financial services and related products. The stock has a 0.54 beta.
WMT will pay a $0.56 quarterly cash dividend on September 6, 2022. The stock pays a $2.24 per share dividend annually, translating to a 1.67% yield. The company’s dividend has grown at a 1.9% rate over the past five years. WMT has increased its dividends for 16 consecutive years.
On August 31, 2022, WMT signed an agreement to acquire a minority stake in Sustainable Beef LLC, a rancher-owned company. WMT’s investment is part of a broader strategic partnership to source top-quality Angus beef from Sustainable Beef LLC’s new beef processing facility and create more capacity for the beef industry.
Also, it provides greater visibility into the beef supply chain and complements WMT’s regeneration commitment to improving grazing management.
WMT’s total revenues for its fiscal 2023 second quarter ended July 31, 2022, increased 8.4% year-over-year to $152.86 billion. The company’s net income came in at $5.15 billion for the quarter, representing a 20.4% rise from the prior-year period. WMT’s EPS grew 23.7% to $1.88. As of July 31, 2022, the company had $13.92 billion in cash and cash equivalents.
The consensus revenue estimate of $600.17 billion for fiscal 2023 ending January 30, 2023, represents a 4.8% year-over-year improvement. It surpassed Street revenue estimates in each of the trailing four quarters. Its EPS is expected to grow at a rate of 6% per annum over the next five years.
Its 17.6% trailing-12-month ROE is 43.7% higher than the 12.2% industry average. The company’s trailing-12-month ROA of 5.6% is 20% higher than the industry average of 4.7%. Over the past week, the stock has gained 2.2% to close the last trading session at $134.48.
WMT’s POWR Ratings reflect this promising outlook. It has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Stability, Sentiment, and Quality. Click here to see the additional ratings for WMT’s Value and Momentum. WMT is ranked #8 of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
The Coca-Cola Company (KO)
KO owns or licenses, and markets beverage concentrates, finished sparkling soft-drinks brands, energy drinks, dairy, and syrups to fountain retailers such as restaurants and convenience stores. It operates through independent bottling partners, distributors, wholesalers, retailers, and bottling and distribution operators. It has a 0.54 beta.
KO will pay a $0.44 quarterly cash dividend on October 3, 2022. The stock pays a $1.76 per share dividend annually, translating to a 2.84% yield. The company’s dividend has grown at a 3.6% rate over the past five years. KO has increased its dividends for 59 consecutive years.
For its fiscal 2022 second quarter ended July 1, 2022, KO’s net operating revenues increased 11.6% year-over-year to $11.30 billion. The company’s non-GAAP gross profit came in at $6.67 billion, representing a 7.2% rise from the year-ago period. Its non-GAAP operating income came in at $3.47 billion for the quarter, representing an 8% rise from the prior-year period.
While its non-GAAP net income increased 4.4% year-over-year to $3.06 billion, its non-GAAP EPS rose 2.9% to $0.70. As of July 1, 2022, the company had $8.98 billion in cash and cash equivalents.
Analysts expect an EPS of $2.46 for fiscal 2022 ending December 31, 2022, indicating a rise of 6% from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters.
The consensus revenue estimate of $42.13 billion for the same fiscal year represents a 9% year-over-year improvement. Its EPS is expected to grow at a rate of 5.5% per annum over the next five years.
Its 42.3% trailing-12-month ROE is 246.5% higher than the 12.2% industry average. The company’s trailing-12-month ROA of 10.3% is 119.8% higher than the industry average of 4.7%. Over the past week, the stock has lost 1.8% to close the last trading session at $62.
KO’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system.
It has a B grade for Stability, Quality, and Sentiment. In addition to the POWR Ratings grades we have just highlighted, one can see KO’s Growth, Value, and Momentum ratings here. KO is ranked #20 of 34 stocks in the A-rated Beverages industry.
Abbott Laboratories (ABT)
ABT discovers, develops, and sells healthcare products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine worldwide. Its products are sold directly to wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers. It has a 0.70 beta.
ABT paid a $0.47 quarterly cash dividend on August 15, 2022. The stock pays a $1.88 per share dividend annually, translating to a 1.79% yield. The company’s dividend has grown at a 12% rate over the past five years. ABT has increased its dividends for 50 consecutive years.
On August 29, 2022, ABT announced that late-breaking data by its HeartMate 3 heart pump at its MOMENTUM 3 trial extended the survival of advanced heart failure patients by at least five years, providing a clear life-saving option for people battling the later-stage disease. The study showcases the significant benefits of ABT’s heart pump technology and should help HeartMate 3 witness wide recognition across the industry.
ABT’s net sales for its fiscal 2022 second quarter ended June 30, 2022, increased 10.1% year-over-year to $11.26 billion. The company’s adjusted gross profit came in at $6.38 billion, representing a 9.6% year-over-year improvement. Its adjusted pre-tax income came in at $2.97 billion for the quarter, up 20.4% from the prior-year period.
ABT’s adjusted net earnings increased 20.8% year-over-year to $2.54 billion. Its adjusted EPS came in at $1.43, representing a 22.2% rise from the year-ago period. The company had $8.94 billion in cash and cash equivalents as of June 30, 2022.
The company surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at a rate of 11% per annum over the next five years.
Its 58% trailing-12-month gross profit margin is 6.4% higher than the 54.5% industry average. The company’s trailing-12-month EBIT margin of 23.2% is 12602.1% higher than the industry average of 0.2%. Over the past week, the stock has gained 2.9% to close the last trading session at $104.84.
ABT’s POWR Ratings reflect this promising outlook. It has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Value, Stability, Quality, and Sentiment. Click here to see the additional ratings for ABT’s Growth and Momentum. ABT is ranked #3 of 144 stocks in the Medical - Devices & Equipment industry.
MSFT shares rose $0.28 (+0.11%) in after-hours trading Friday. Year-to-date, MSFT has declined -23.37%, versus a -16.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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