Rising oil and gas prices, worsening inflation owing to global geopolitical tensions and logistical hurdles, and the potential for aggressive interest rate hikes later this year are expected to keep the stock market under pressure in the near term. However, according to Gus Faucher, senior vice president, and chief economist of The PNC Financial Services Group, the outlook for the U.S. economy is still good. Therefore, investing in dividend stocks that are well-positioned to capitalize on the economic recovery could be a wise decision.
Investors’ interest in quality dividend stocks is evidenced by the Global X S&P 500 Quality Dividend ETF’s (QDIV) 4.4% returns in the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 5.7% decline.
Strong fundamentals and impressive dividend yields we think make Medtronic plc (MDT), Sanofi (SNY), Nippon Telegraph and Telephone Corporation (NTTYY), Honda Motor Co., Ltd. (HMC), and Hewlett Packard Enterprise Company (HPE) solid bets now.
Medtronic plc (MDT)
Headquartered in Dublin, Ireland, MDT develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It has four segments: Cardiovascular Portfolio; Neuroscience Portfolio; Medical Surgical Portfolio; and Diabetes Operating Unit.
On Feb.22, 2022, Geoff Martha, MDT’s chairman and CEO, said, “We expect healthcare procedures to reaccelerate post-Omicron, and our commitment to durable and higher growth remains steadfast.”
MDT’s dividend payouts have grown at a 7.9% CAGR over the past five years and at an 8% CAGR over the past three years. Its four-year average yield is 2.09%, while its forward dividend translates to a 2.31% yield. On March 4, 2022, MDT approved a fiscal year 2022 fourth-quarter cash dividend of $0.63 per ordinary share, representing an 8.6% increase over the prior year.
MDT’s non-GAAP operating profit increased 5.5% year-over-year to $2.18 billion in its fiscal 2022 third quarter, ended Jan. 28, 2022. Its non-GAAP net income came in at $1.85 billion, up 5.3% year-over-year, while its non-GAAP EPS came in at $1.37, compared to a $0.11 loss per share in the year-ago period.
Analysts expect MDT’s revenue and EPS to increase 6.4% and 27.5%, respectively, year-over-year to $32.05 billion and $5.66 for its fiscal 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock gained 3% in price to close yesterday’s trading session at $106.16.
MDT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
MDT has a B grade for Value, Sentiment, and Stability. Within the Medical - Devices & Equipment industry, it is ranked #17 of 166 stocks. Click here to see the additional POWR Ratings for Momentum, Growth, and Quality for MDT.
Click here to checkout our Healthcare Sector Report for 2022
Sanofi (SNY)
Headquartered in Paris, France, SNY, with its subsidiaries, researches, develops, manufactures, and markets therapeutic solutions in the United States, Europe, and internationally. It has three segments: Pharmaceuticals; Vaccines; and Consumer Healthcare.
On Feb. 4, 2022, SNY’s CEO, Paul Hudson, said, “We further strengthened our R&D capabilities with a series of value creating M&A transactions in 2021. Our excellent financial performance validates our ability to increase profitability through improved product mix, supported by expense management and the reinvestment of savings behind our growth drivers, all of which puts us on a trajectory to achieving our 2022 financial targets.”
Over the last five years, SNY’s dividend payouts have grown at a 3% CAGR. While the four-year average dividend yield for SNY is 3.86%, its forward dividend translates to a 3.73% yield.
SNY’s net sales came in at €9.99 billion ($10.98 billion) for the fourth quarter, ended Dec. 31, 2021, up 6.5% year-over-year. Its net income came in at €1.13 billion ($1.24 billion), up 6% year-over-year. Also, its EPS was €0.90, up 5.9% year-over-year.
Analysts expect SNY’s revenue to be $46.34 billion in its fiscal year 2023, representing a 4.1% year-over-year rise. The company’s EPS is expected to increase 10.3% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 6.3% in price to close yesterday’s trading session at $51.59.
SNY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system.
It has a B grade for Value and Stability. It is ranked #22 of 175 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for SNY (Growth, Momentum, Sentiment, and Quality).
Click here to checkout our Healthcare Sector Report for 2022
Nippon Telegraph and Telephone Corporation (NTTYY)
Headquartered in Tokyo, Japan, NTTYY provides fixed voice-related, mobile voice-related, IP/packet communications, and system integration services in Japan and internationally. Its segments are Mobile Communications Business; Regional Communications Business; Long Distance and International Communications Business; Data Communications Business; and Other Business.
On March 16, 2022, NTTYY announced its collaboration with Schneider Electric to deliver Private 5G (P5G). Shahid Ahmed, EVP New Ventures and Innovation at NTT, said, “With this strategic partnership, we are confident that NTT's P5G solution will support Schneider Electric business and service level objectives with a powerful machine vision solution that solves for operational continuity and performance throughout the Lexington and Lincoln plant facilities.”
NTTYY’s dividend payouts have grown at a 12.1% CAGR over the past five years and at an 11% CAGR over the past three years. Its forward annual dividend yields 3.27%.
For the nine months ended Dec. 31, 2021, NTTYY’s operating revenues came in at ¥8.92 trillion ($73.34 billion), up 2.1% year-over-year. Its profit was ¥1.09 trillion ($8.92 billion), up 4.2% year-over-year, while its EPS came in at ¥286.08, up 27.7% year-over-year.
The company’s EPS is expected to increase 7.8% per annum for the next five years. Over the past year, the stock has gained 10.6% in price to close yesterday’s trading session at $30.08.
It is no surprise that NTTYY has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Stability and a B grade for Value.
NTTYY is ranked #9 of 47 stocks in the A-rated Telecom - Foreign industry. Click here to see the additional POWR Ratings for NTTYY (Growth, Momentum, Sentiment, and Quality).
Honda Motor Co., Ltd. (HMC)
Tokyo-based HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and others domestically and internationally. Its four segments are Motorcycle Business; Automobile Business; Financial Services Business; Life creation; and Other Businesses.
On March 4, 2022, HMC and Sony Group Corporation agreed to form a strategic alliance, aiming to create a new era of mobility and mobility services. Toshihiro Mibe, Director, President, Representative Executive Officer, and CEO of HMC, said, “The New Company will aim to stand at the forefront of innovation, evolution, and expansion of mobility around the world, by taking a broad and ambitious approach to creating value that exceeds the expectations and imagination of customers.”
HMC’s dividend payouts have grown at a 3.1% CAGR over the past five years. Its four-year average yield is 3.23%, while its current yield is 3.42%.
For nine months ended Dec. 31, 2021, HMC’s sales revenue increased 11.8% year-over-year to ¥10.68 trillion ($92.74 billion). The company’s profit for the period came in at ¥582.10 billion ($5.06 billion), up 31.1% year-over-year. Its operating profit came in at ¥671.6 billion ($5.83 billion), up 50.2% year-over-year.
HMC’s revenue is expected to be $35.36 billion for the period ending Sept. 31, 2022, representing a 17.7% year-over-year rise. In addition, the company’s EPS is expected to increase 13.2% per annum for the next five years. The stock closed yesterday’s trading session at $28.37.
HMC has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Value and Sentiment and a B grade for Stability and Quality. Click here to see HMC’s ratings for Growth and Momentum as well. It is ranked #4 of 68 stocks in the Auto & Vehicle Manufacturers industry.
Click here to check out our Automotive Industry Report for 2022
Hewlett Packard Enterprise Company (HPE)
HPE in Palo Alto, Calif., provides solutions that allow customers to seamlessly capture, analyze, and act upon data in the Americas, Europe, the Middle East, Africa, the Asia Pacific, and Japan. It delivers unique, open, and intelligent technology solutions as a service.
On March 1, 2022, Antonio Neri, HPE’s President and CEO, said, “It is clear from strong customer feedback and momentum across our businesses that we are increasingly well positioned to capitalize on the significant megatrends through our HPE GreenLake platform.”
HPE has paid dividends consecutively for more than five years. HPE’s dividend has grown at 21.7% CAGR over the past five years. Its four-year average yield is 3.28%, while its forward annual dividend translates to a 2.8% yield. On March 1, 2022, HPE declared a regular cash dividend of $0.12 per share on the company’s common stock, payable on April 8, 2022.
HPE’s net revenue increased 1.9% year-over-year to $6.96 billion for its fiscal year 2022 first quarter, ended Jan. 31, 2022. Its net earnings came in at $513 million, up 130% year-over-year. Also, its EPS was $0.39, up 129.4% year-over-year.
Analysts expect HPE’s revenue to be $28.64 billion in its fiscal year 2022, representing a 3.1% year-over-year rise. The company’s EPS is expected to increase 11.8% per annum for the next five years. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 15% in price over the past year to close yesterday’s trading session at $16.97.
HPE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
HPE has a B grade for Value and Sentiment. It is ranked #8 of 54 stocks in the Technology - Communication/Networking industry. Click here to see the additional POWR Ratings for Momentum, Growth, Stability, and Quality for HPE.
MDT shares were unchanged in premarket trading Thursday. Year-to-date, MDT has gained 2.62%, versus a -5.79% 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.
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