The October inflation data revealed that signs of cooling inflation have uplifted investor sentiments. However, market volatility is expected to remain for a while. As per Capital Economics, S&P 500 is forecasted to fall to a 3200 trough by mid-2023.
Moreover, given the current scenario of elevated interest rates, high inflation, and rising recessionary fears, many investors would remain prudently defensive moving into 2023.
Against this backdrop, dividend-paying stocks tend to provide a safeguard against uncertainties and offer investors consistent returns. Investors’ interest in dividend stocks is evident from SPDR S&P Dividend ETF’s (SDY) 4.5% return over the past month, outpacing the S&P 500 index’s gains of 1.5% over the same period.
Therefore, we think fundamentally strong dividend stocks Natural Resource Partners L.P.(NRP), Spok Holdings, Inc. (SPOK), and Gilead Sciences, Inc. (GILD) are the best purchases now.
Natural Resource Partners L.P. (NRP)
NRP owns, manages, and leases a portfolio of mineral properties in the United States. The company operates through its two broad segments, Mineral Rights and Soda Ash, owning interests in coal, soda ash, trona, and other natural resources.
On November 3, NRP declared a cash distribution of $0.75 per common unit, which was payable to unitholders on November 22, 2022. Its annual dividend of $3.00 yields 7.13% on prevailing prices. Its four-year average dividend yield is 8.47%.
The company’s dividend payouts have increased at a 14.5% CAGR over the past three years and 8.5% CAGR over the past five years.
On September 29, NRP announced its intention to redeem all its outstanding 9.125% Senior Notes due 2025 on October 31, 2022, at a redemption price of 102.281% of the principal amount plus accrued and unpaid interest.
NRP’s total revenues and other income increased 80% year-over-year to $102.26 million in the third quarter ended September 30, 2022. Its income from operations grew 109.9% from the year-ago value to $82.18 million, while its net income attributable to common unitholders and the general partner improved 211.3% year-over-year to $67.06 million. Net income per common unit increased 237.3% from its year-ago value to $3.71.
The stock has gained 26% year-to-date to close its last trading session at $42.10. It has gained 2.7% intraday.
NRP’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NRP is rated a B for Sentiment and Quality. Within the A–rated MLPs – Other industry, it is ranked #3 out of 10 stocks.
Click here to see additional POWR Ratings for Growth, Value, Momentum, and Stability for NRP.
Spok Holdings, Inc. (SPOK)
As a healthcare communications establishment, SPOK offers unified clinical communication and collaboration solutions comprising call center operations, clinical alerting and notifications, and mobile communications to care teams.
On October 26, the company declared a regular quarterly dividend of $0.3125 per share, payable to stockholders on December 9, 2022. This cumulates to an annual dividend of $1.25 per share and yields 15.41% on the current share price. Its four-year average dividend yield is 6%.
The company’s dividend payments have grown at a 35.7% CAGR over the past three years and a 10.8% CAGR over the past five years.
On October 26, Vincent D. Kelly, SPOK’s chief executive officer, said, “Going forward, we believe our extensive experience operating our established communication solutions will create significant value for stockholders by maximizing revenue and cash flow generation."
For the fiscal third quarter ended September 30, SPOK’s operating income came in at $3.54 million, compared to an operating loss of $3.56 million in the year-ago period. Its adjusted EBITDA and net income came in at $4.66 million and $2.92 million, respectively.
In addition, the company’s net income per common share came in at $0.15, compared to the net loss per common share of $0.13 in the prior-year period.
Analysts expect SPOK’s EPS for the current fiscal year (ending December 2022) to grow 95.6% from the previous year. The company’s EPS for the fiscal 2023 second quarter (ending June 2023) is expected to increase 40% year-over-year to $0.14.
The stock has gained 14.6% over the past six months to close the last trading session at $8.11. It has gained 1.3% intraday.
SPOK’s POWR Ratings reflect its promising prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Growth and a B for Quality and Sentiment. Within the Telecom – Domestic industry, it is ranked #1 among 19 stocks.
Click here to see additional ratings of SPOK for Value, Stability, and Momentum.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally.
On November 29, GILD announced that the European Commission expanded marketing authorization for Biktarvy’s new low-dose tablet dosage form and an extension of the indication for Biktarvy to treat HIV infection in Pediatric Populations. This might boost the company’s revenue stream.
On October 17, GILD and MacroGenics, Inc. (MGNX) announced an exclusive option and collaboration agreement to develop MGD024, an investigational, bispecific antibody, and two additional bispecific research programs. This is expected to bolster the company’s portfolio.
On October 27, GILD declared a quarterly dividend of $0.73 per share of common stock for the fourth quarter. Its annual dividend of $2.92 yields 3.4% on the current share price. It has a four-year average yield of 4%.
The company’s dividend payouts have increased at a 5.6% CAGR over the past three years and a 7.4% CAGR over the past five years. The company grew its dividend payments for six consecutive years.
GILD’s total product sales, excluding Veklury, came in at $6.05 billion for the third quarter that ended September 30, up 11.4% year-over-year. Non-GAAP net income attributable to GILD and non-GAAP EPS came in at $2.39 billion and $1.90, respectively. The company’s cash and cash equivalents at the end of the period rose 7.7% from the prior-year period to $4.70 billion.
For the fourth quarter ending December 2022, Street expects GILD’s EPS to increase 115.3% year-over-year to $1.49. Its revenue is expected to come in at $6.65 billion for the same period. It surpassed consensus EPS estimates in three of the four trailing quarters.
Over the past three months, the stock has gained 37.3% to close the last trading session at $85.76. It has gained 8.2% over the past month.
This promising outlook is reflected in GILD’s POWR Ratings. The stock’s overall A rating equates to a Strong Buy in our proprietary rating system.
GILD has an A grade for Value and Sentiment and a B for Quality. Among the 380 stocks in the Biotech industry, it is ranked #3.
Click here for the additional POWR Ratings for Growth, Stability, and Momentum for GILD.
NRP shares were trading at $42.00 per share on Wednesday morning, down $0.10 (-0.24%). Year-to-date, NRP has gained 33.63%, versus a -16.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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