On Wednesday, the Federal Reserve followed through with its anticipated interest rate increase, raising short-term rates by 0.50% to tame inflation. The central bank suggested a further increase in interest rates this year, also detailing the unwinding of its nearly $9 trillion balance sheet. The U.S. stock market edged higher after the Fed announced that a 75 basis points increase in rates is not being considered. The Dow climbed 2.8%, the S&P 500 surged 3%, while the Nasdaq Composite climbed 3.2%.
However, the economy is still grappling with sky-high inflation and the highest single rate hike since May 2000. The stock market's volatility is evident, with the CBOE Volatility Index (^VIX) up some 40% over the past month. Furthermore, Morgan Stanley (MS) predicted the S&P 500 to fall sharply, expecting a more than 16% fall from last Friday’s close in the worst-case scenario.
Against this volatile backdrop, we think resilient dividend-paying stocks Waste Management, Inc. (WM), Suncor Energy Inc. (SU), Takeda Pharmaceutical Company Limited (TAK), Olin Corporation (OLN), and Marathon Petroleum Corporation (MPC) might be solid additions to one’s portfolio.
Waste Management, Inc. (WM)
Houston, Tex.-based WM offers waste management environmental services to its residential, commercial, industrial, and municipal customers. The company provides collection services that include picking up and transporting waste and recyclable materials and operating landfill gas-to-energy facilities.
On April 28, WM announced the pricing of a $1 billion issue of 4.15% senior notes, due April 15, 2032. The company intends to use the net proceeds from the offering to redeem its $500 million, 2.90% senior notes due 2022 and for general corporate purposes.
On March 1, WM declared a $0.65 per share quarterly dividend of, which was payable to shareholders on March 31. Its annual dividend of $2.60 yields 1.60% at its current share price. Its dividend payouts have increased at a 7.6% CAGR over the past three years and a 7.5% CAGR over the past five years. The company has 19 years of consecutive dividend growth.
For its fiscal first quarter, ended March 31, WM’s operating revenues increased 13.4% year-over-year to $4.66 billion. Its adjusted net income rose 20% from the prior-year quarter to $540 million. And its adjusted EPS improved 21.7% from the same period in the prior year to $1.29.
The $1.41 consensus EPS estimate for the quarter ending June 30, 2022, indicates an 11% year-over-year increase. And the $4.84 billion consensus revenue for the same period reflects an improvement of 14.3% from the prior-year period.
The stock has gained 15.2% in price over the past year and 11.9% over the past three months to close yesterday’s trading session at $162.33.
WM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
WM has a Growth, Stability, and Quality grade of B. In the 16-stock Waste Disposal industry, it is ranked #2. The industry is rated B. Click here to see the additional POWR Ratings for WM (Value, Momentum, and Sentiment).
Suncor Energy Inc. (SU)
SU, headquartered in Calgary, Canada, is an integrated energy company that is focused primarily on developing petroleum resource basins in Canada’s Athabasca oil sands. The company explores for, acquires, produces and transports crude oil in Canadian and international markets.
On April 4, SU announced that it would focus on hydrogen and renewable fuels to progress toward its objective to be a net-zero company by 2050. The company expects to drive shareholder returns over a long period and meet its emission targets through this venture.
On Feb. 2, 2022, SU declared a quarterly dividend of CAD0.42 per share, which was payable to shareholders on March 25. SU’s annual dividend of $1.33 pays 3.55% on its current prices. Its dividend payouts have increased at a 2.2% CAGR over the past five years.
For the fourth fiscal quarter ended December 31, SU’s revenues, net of royalties, and other income increased 69.2% year-over-year to CAD11.16 billion ($8.71 billion). Its adjusted funds from operations rose 157.5% from the prior-year quarter to CAD3.14 billion ($2.45 billion). Its net earnings and net earnings per common share stood at CAD1.55 billion ($1.21 billion) and CAD1.07, respectively, registering a substantial increase over their negative year-ago values.
The Street’s $1.29 EPS estimate for the quarter ending June 30, 2022, indicates a 239.5% year-over-year increase. And the Street’s $9.91 billion revenue estimate for the same quarter reflects a 37.8% improvement from the prior-year period.
The stock has gained 70.8% in price over the past year to close yesterday’s trading session at $37.39. It has gained 49.4% in price year-to-date.
It is no surprise that SU has an overall B rating, which translates to Buy in our POWR Rating system. SU has an A grade for Momentum and Quality and a B grade for Growth. In the 97-stock Energy – Oil & Gas industry, it is ranked #33. The industry is rated B.
In addition to the POWR Rating grades we have stated above, one can see SU ratings for Value, Stability, and Sentiment here.
Takeda Pharmaceutical Company Limited (TAK)
TAK researches, develops, manufactures, markets, and out-licenses pharmaceutical products worldwide. The company offers its products for gastroenterology, oncology, neuroscience, and rare diseases. It is headquartered in Tokyo, Japan.
On April 28, Centogene N.V (CNTG), a biodata life-science partner company announced the extension of its partnership with TAK. Under the agreement, CNTG is expected to continue to provide TAK with access to diagnostic testing for global patients.
On April 19, TAK announced that it had received manufacturing and marketing approval from the Japan Ministry of Health, Labour and Welfare (MHLW) for Nuvaxovid Intramuscular Injection (Nuvaxovid), a novel recombinant protein-based COVID-19 vaccine for primary and booster immunization in adults. This might add to the company’s revenue stream.
TAK’s $0.80 annual dividend rate yields 5.55% at its current share price.
For the nine months ended December 31, TAK’s revenue increased 11% year-over-year to $23.41 billion. Its net profit for the period and EPS came in at $2.10 billion and $1.33, respectively, up 34.9% and 34.6% from the prior-year period.
Analysts expect TAK’s EPS to increase 34.6% year-over-year to $0.91 for its fiscal year ending March 31, 2023. The Street expects revenue for the same year to improve 0.4% from the prior year to $26.74 billion.
The stock has gained 8.3% in price year-to-date and 1.2% over the past five days to close yesterday’s trading session at $14.76.
This promising prospect is reflected in TAK’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. TAK has a Value grade of A and a Stability grade of B. It is ranked #35 among the 168 stocks in the Medical – Pharmaceuticals industry.
To see the additional POWR Ratings for Growth, Momentum, Sentiment, and Quality for TAK, click here.
Click here to checkout our Healthcare Sector Report for 2022
Olin Corporation (OLN)
OLN in Clayton, Miss., is a chemical products manufacturer and distributor in the United States, Europe, and globally, operating through the Chlor Alkali Products and Vinyls; Epoxy; and Winchester segments. The company sells its offerings to various industrial customers and mass merchants through its sales force.
On April 28, OLN and turnkey hydrogen solution provider Plug Power, Inc. (PLUG) announced an agreement to create a joint venture for the production and marketing of green hydrogen that is expected to support the growing hydrogen fuel cell demand. This should benefit the company.
On March 31, Mitsui & Co., Ltd., and the company announced the formation of a global strategic alliance to better serve their customers. The joint venture would be an independent buyer, supplier, and seller of electrochemical unit (ECU)-based derivatives with potential future expansion into other ECU derivatives and related products. The company intends to drive strategic and sustainable solutions across its value chain through this venture.
OLN’s $0.20 current quarterly dividend aggregates to an annual dividend of $0.80 and yields 1.24% at its current share price. OLN has a four-year average yield of 3.53%.
OLN’s sales increased 28.3% year-over-year to $2.46 billion in its fiscal first quarter, ended March 31. Its net income and net income per common share came in at $393 million and $2.48, respectively, up 61.3% and 64.2% from the same period the prior year.
The Street’s $2.55 EPS estimate for the quarter ending June 30, 2022, reflects a 13.8% rise from the prior-year quarter. And the Street’s $2.61 billion revenue estimate for the same quarter indicates a 23.5% year-over-year increase. In addition, OLN has topped consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 41.4% in price to close yesterday’s trading session at $64.52. It has gained 22% over the past month.
OLN has an overall B rating, which translates to Buy in our POWR Rating system. The stock has a B grade for Value and Quality. It is ranked #22 among the 90 stocks in the Chemicals industry. The industry is rated A.
In addition to the POWR Rating grades we have stated above, one can see OLN’s rating for Growth, Momentum, Stability, and Sentiment here.
Marathon Petroleum Corporation (MPC)
MPC in Finlay, Ohio operates as a refining, marketing, retailing, and transportation company of petroleum products, primarily in the United States. The company operates through the two broad segments of Refining & Marketing and Midstream.
On March 1, MPC announced that it had agreed to create a 50/50 joint venture with Neste Oyj (NTOIY) for MPC’s Martinez renewable fuels project. MPC’s President and Chief Executive Officer Michael J. Hennigan said “Our partnership with Neste signals another step in our commitment to the energy evolution and our focus on lowering the carbon intensity of our operations and the products we manufacture.”
On April 27, MPC declared a $0.58 per share dividend on its common stock. The company’s $2.32 annual dividend yields 2.41% at its current share price. Its dividend payouts have increased at a CAGR of 6.7% and 10.6%, respectively, over the past three and five years.
For its fiscal first quarter, ended March 31, MPC’s total revenues and other income increased 67.7% year-over-year to $38.38 billion. Its net income attributable to MPC and net income per share came in at $845 million and $1.49, respectively, up substantially from their negative year-ago values.
The $2.66 consensus EPS estimate for the quarter ending June 30, 2022, indicates a 297% year-over-year increase. Likewise, the $37.03 billion consensus revenue estimate for the same quarter reflects a 24.2% improvement from the prior-year quarter. Furthermore, MPC has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 68.2% in price over the past year and 50.6% year-to-date to close yesterday’s trading session at $96.35.
MPC has an overall B rating, which equates to Buy in our proprietary rating system. The stock has a Growth and Momentum grade of A and a Quality grade of B. It is ranked #14 in the Energy – Oil & Gas industry.
Click here to see the additional POWR Ratings for MPC (Value, Stability, and Sentiment).
WM shares were trading at $158.20 per share on Thursday afternoon, down $4.13 (-2.54%). Year-to-date, WM has declined -4.81%, versus a -13.21% 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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