Stock futures have risen early Friday as investors awaited the jobs report for March. However, in Thursday's trading session, the Dow Jones Industrial Average slumped 1.56%, closing the first negative quarter for stocks in two years, while the S&P 500 and the Nasdaq Composite slipped 1.57% and 1.54%, respectively.
The global financial market has faced a volatile month as energy prices rose owing to the conflict between Russia and Ukraine, which weighed on equities and government bond yields. The CBOE Volatility Index (^VIX) has gained 17% year-to-date. A CNBC Delivering Alpha investor survey found that as investors face heightened uncertainty due to the Fed’s rate hike cycles, most would like to bet on high dividend stocks, as dividends generally offer investors a way of generating income during uncertainty.
Therefore, we believe it could be wise to scoop up the shares of high-yielding stocks, Altria Group, Inc. (MO), Valero Energy Corporation (VLO), Telefônica Brasil S.A. (VIV), Rattler Midstream LP (RTLR), and Natural Resource Partners L.P. (NRP), which are trading near their 52-week highs now.
Altria Group, Inc. (MO)
MO operates as a manufacturer and seller of smokeable and oral tobacco products in the United States. The company offers cigarettes mainly under the Marlboro brand, cigars, and pipe tobacco under the Black & Mild brand.
On February 25, MO announced a regular quarterly dividend of $0.90 per share, payable on April 29 to shareholders. The company’s annual dividend rate of $3.60 yields 6.89% on current prices. The company’s dividend payouts have increased at a CAGR of 4.7% over the past three years and a CAGR of 8.3% over the past five years. MO has 14 consecutive years of dividend growth.
For the fiscal fourth quarter ended December 31, MO’s operating income increased 5.9% year-over-year to $2.73 billion. Adjusted net earnings rose 8.4% from the prior-year quarter to $1.99 billion. Adjusted EPS improved 10.1% from the same period the prior year to $1.09.
The consensus EPS estimate of $5.15 for the fiscal year 2023 indicates a 6.4% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $21.38 billion reflects an improvement of 1.5% from the prior year. Moreover, MO has an impressive surprise earnings history, as it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 14.8% over the past six months and 10.3% year-to-date to close yesterday’s trading session at $52.25. It is currently trading 3.2% below its 52-week high of $53.96.
MO’s strong fundamentals are reflected in its POWR Ratings. The stock 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.
MO has a Quality grade of A and a Growth grade of B. In the 11-stock Tobacco industry, it is ranked #3. The industry is rated B.
Click here to see the additional POWR ratings for MO (Value, Momentum, Stability, and Sentiment).
Valero Energy Corporation (VLO)
VLO operates internationally as a manufacturer and seller of transportation fuels and petrochemical products. Operating through the three broad segments of Refining; Renewable Diesel; and Ethanol, the company is involved in the oil and gas refining, marketing, and bulk selling activities.
On February 2, VLO announced the pricing of $650 million aggregate principal amount of its 4.000% Senior Notes due 2052. The company intends to use the net proceeds from this offering to finance its cash tender offers to repurchase its Senior Notes issued by Valero Energy Partners L.P. and for general corporate purposes.
On January 20, VLO declared a quarterly dividend on the common stock of $0.98 per share, payable on March 3. VLO’s annual dividend of $3.92 yields 3.86% on current prices. The company’s dividend payouts have increased at a CAGR of 5.9% over the past three years and a CAGR of 9.4% over the past five years.
For the fiscal fourth quarter ended December 31, VLO’s revenues increased 116.2% year-over-year to $35.90 billion. Adjusted net income, attributable to VLO stockholders and adjusted earnings per common share, came in at $1.01 billion and $2.47, both registering a considerable increase over their negative year-ago values.
Analysts expect VLO’s EPS to increase 191.9% year-over-year to $1.59 for the fiscal first quarter ended March 2022. Likewise, Street expects its revenue to come in at $28.36 billion for the same quarter, indicating an improvement of 52.1% from the prior-year period. Additionally, VLO has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
VLO’s shares have gained 41.8% over the past year and 35.2% year-to-date to close yesterday’s trading session at $101.54. It is currently trading 1.5% below its 52-week high of $103.09.
It’s no surprise that VLO has an overall B rating, which translates to Buy in our POWR Rating system.
VLO has a Growth and Momentum grade of B. It is ranked #13 in the same industry.
Click here to see the additional POWR Ratings for Value, Stability, Sentiment, and Quality for VLO.
Telefônica Brasil S.A. (VIV)
VIV is a mobile and fixed telecom services provider to residential and corporate consumers in Brazil. Its fixed-line services portfolio includes local, domestic long-distance, and international long-distance calls, while its mobile portfolio comprises voice and broadband internet access. It is headquartered in Sao Paulo, Brazil.
VIV’s annual dividend of $0.64 yields 5.73% on current prices.
For the fiscal fourth quarter of 2021, VIV’s net operating revenue increased 2.8% year-over-year to R$11.50 billion ($2.42 billion). Recurring EBITDA rose 1.1% from the prior-year quarter to R$4.93 billion ($1.04 billion), while its net income improved 103.2% from the same period the prior year to R$2.63 billion ($552.06 million).
The consensus EPS estimate of $0.16 for the fiscal quarter ended March 2022 indicates a 60% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $2.19 billion reflects an improvement of 10.3% from the prior-year quarter.
The stock has gained 43% over the past year and 30.1% year-to-date to close yesterday’s trading session at $11.25. It is currently trading marginally below its 52-week high of $11.32.
This promising outlook is reflected in VIV’s POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
VIV has a Stability, Sentiment, and Quality grade of B. In the 47-stock Telecom – Foreign industry, it is ranked #6. The industry is rated A.
Click here to see the additional POWR Ratings for VIV (Growth, Value, and Momentum).
Rattler Midstream LP (RTLR)
RTLR is the owner, operator, and developer of midstream and energy-related infrastructure assets in the Midland and Delaware basins of the Permian Basin. The company’s offerings include crude oil and water-related midstream services. RTLR is a subsidiary of Diamondback Energy, Inc. (FANG).
On December 1, RTLR announced the closing of its drop-down transaction with FANG, whereby RTLR acquired certain water midstream assets from FANG for $160 million in cash. The acquired assets should prove to be beneficial for the company.
On February 16, RTLR approved a cash distribution of $0.30 per common unit, which was payable on March 14. The company’s annual dividend of $1.20 yields 8.59% on current prices. The company has two years of consecutive dividend growth.
RTLR’s net income increased 14.4% year-over-year to $44.45 million in the fiscal fourth quarter ended December 31. Net income attributable to limited partners per common unit rose 14.3% from the prior-year period to $0.24, while adjusted EBITDA improved 4.1% from the same period the prior year to $80.81 million.
Street EPS estimate for the quarter ended March 2022 of $0.31 indicates a 93.8% year-over-year improvement. Likewise, Street revenue estimate of $100.46 million for the same quarter reflects an increase of 1.5% from the prior-year quarter.
Over the past year, the stock has gained 31.4% and 22.8% year-to-date to close yesterday’s trading session at $13.97. It is currently trading 5.7% below its 52-week high of $14.82.
RTLR has an overall B rating, which translates to Buy in our POWR Rating system.
RTLR has a Momentum grade of A and a Quality grade of B. In the 11-stock MLPs – Other industry, it is ranked #7. The industry is rated A.
To see the additional POWR Ratings for Growth, Value, Stability, and Sentiment for RTLR, click here.
Natural Resource Partners L.P. (NRP)
NRP owns and operates a diversified portfolio of mineral properties in the United States. The company primarily holds interest in coal, industrial minerals, and aggregates, and an equity investment in a soda ash operation in Ciner, Wyoming.
On February 7, NRP announced it had executed a CO2 Sequestration Agreement for the evaluation and potential development of a permanent CO2 sequestration site located on Alabama’s Gulf Coast with Denbury Carbon Solutions, LLC, a subsidiary of Denbury Inc. (DEN). Craig Nunez, NRP’s President and Chief Operating Officer, stated, “We are very pleased to partner with Denbury on this world-class carbon sequestration project, which has the potential to provide important benefits to the environment and add significant value to NRP.”
On February 9, NRP declared a fourth-quarter distribution of $0.45 per common unit for NRP. This was payable on February 28. The company’s annual dividend of $1.80 yields 4.21% on the prevailing share price. The company’s dividend payouts have increased at a CAGR of 5.9% over the past five years.
For the fiscal fourth quarter ended December 31, NRP’s total revenues and other income increased 114.2% year-over-year to $83.91 million. Net income and net income per common unit came in at $55.64 million and $2.42, up 278.8% and 332.1% from the prior-year quarter.
NRP’s shares have gained 165% over the past year and 27.9% year-to-date to close yesterday’s trading session at $42.74. It is currently trading 3.7% below its 52-week high of $44.40.
NRP has an overall A rating, equating to Strong Buy in our proprietary rating system.
NRP has an A grade for Momentum and a B grade for Growth, Sentiment, and Quality. It is ranked #2 in the MLPs – Other industry.
In addition to the POWR Rating grades we’ve stated above, one can see NRP ratings for Value and Stability here.
MO shares fell $0.01 (-0.02%) in after-hours trading Friday. Year-to-date, MO has gained 13.14%, versus a -4.34% rise in the benchmark S&P 500 index during the same period.
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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