January’s robust jobs report raises concerns about how long the Fed will keep interest rates high. Market experts are now expecting a higher final interest rate. As the uncertainty dims, quality stocks Gilead Sciences (GILD), Valero Energy (VLO), and ARC Document (ARC), which are paying stable dividends, could be ideal buys for 2023. Continue reading.
While the stock market got off to a solid start to the year, surprisingly strong payrolls data raise concerns about an aggressive move by the US Federal Reserve. US job growth accelerated sharply in January, with nonfarm payrolls rising by 517,000 jobs, well above the 185,000 estimate. The unemployment rate hit a more than 50-year low at 3.4%.
The Federal Reserve is likely to hike interest rates by another 25 basis points at the March monetary policy meeting, according to Morgan Stanley’s latest research note. The company also raised the Fed’s top interest rate to 4.875% from a previous estimate of 4.75% and plans the first rate cut in December 2023.
In addition, Reuters market analyst John Kemp said in a column that US manufacturers “likely entered a recession” in the fourth quarter of last year, based on new findings from the Institute for Supply Management’s monthly report.
While manufacturing has so far avoided widespread layoffs, Kemp attributed this in part to “labour hoarding,” or companies’ reluctance to let workers go after struggling to find workers the year before.
As uncertainty is expected to remain, stocks paying high and stable dividends, Gilead Sciences, Inc. (GILD), Valero Energy Corporation (VLO) and ARC Document Solutions, Inc. (ARC) could be ideal buys in 2023.
Gilead Sciences, Inc. (GILD)
GILD, a biopharmaceutical company, discovers, develops and commercializes medicines in areas of unmet medical need in the United States, Europe and internationally.
On February 3, GILD announced that the U.S. Food and Drug Administration (FDA) approved Trodelvy for the treatment of breast cancer in adult patients who received endocrine therapy and at least two additional systemic therapies in the metastatic setting.
Trodelvy is also recommended by the National Comprehensive Cancer Network (NCCN) as a preferred treatment for Category 1 HR+/HER2- metastatic breast cancer, as defined in the Clinical Practice Guidelines in Oncology. This is a significant achievement for the company.
On February 2, GILD announced a 2.7% increase in the company’s quarterly cash dividend, resulting in a quarterly dividend of $0.75 per common share, payable March 30.
GILD pays $3.00 annually in dividends. That’s a yield of 3.55% at the current price, compared to the 4-year average dividend yield of 4.00%. Its dividend payments have grown at a CAGR of 5% and 7% over the past three and five years, respectively. It has also paid dividends for seven consecutive years.
GILD’s total revenue increased 2% year over year to $7.39 billion for the fourth quarter ended December 31, 2022. The company’s non-GAAP net income increased 143.2% year over year to $2.11 billion, while non-GAAP EPS increased 142% year over year to $1.67.
Analysts expect GILD’s revenue for the second quarter of the fiscal year ended June 2023 to total $6.48 billion, indicating a 3.6% year-over-year growth. The company’s earnings per share are expected to increase 8.3% compared to the same quarter last year to $1.71 in the same quarter. Additionally, it’s beaten consensus estimates for revenue and earnings per share in each of the last four quarters, which is impressive.
The stock is up 41.2% over the past nine months to close the last trading session at $86.36.
GILD’s POWR ratings reflect the promising prospects. The stock has an overall rating of A, which is a Strong Buy in our proprietary rating system. The POWR ratings are calculated considering 118 different factors, with each factor being optimally weighted.
GILD also has an A grade for value and B for quality. It ranks #5 out of 401 stocks in the biotech industry.
Click here to access additional assessments of GILD’s growth, stability, sentiment and momentum.
Valero Energy Corporation (VLO)
VLO manufactures, markets and sells fuels and petrochemical products in the United States, Canada, United Kingdom, Ireland and internationally. The Company operates through three segments: Refining; renewable diesel; and ethanol.
On Jan. 31, VLO and Darling Ingredients Inc. (DAR) announced that the companies have made the final investment decision for a Sustainable Aviation Fuel (SAF) project at the Diamond Green Diesel (DGD) facility in Port Arthur, which owns and is operated by Diamond Green Diesel Holdings LLC, a 50/50 joint venture between VLO and DAR.
Upon completion of this project, DGD Port is expected to be one of the largest SAF manufacturers in the world.
On January 31, VLO announced an increase in the company’s regular quarterly cash dividend on common stock to $1.02 per share from $0.98 per share. The dividend is payable on March 16.
VLO pays a dividend of $4.08 per share annually, which translates to a 3.10% yield on its current price. Its dividend payments have grown at a CAGR of 2.9% and 7% over the past three and five years, respectively. The company has a four-year average dividend yield of 5.03%. It has also paid dividends for 25 consecutive years.
For the fourth fiscal quarter ended December 31, 2022, VLO’s revenue increased 16.3% year over year to $41.75 billion. Adjusted net income attributable to VLO increased 227% year over year to $3.23 billion, while adjusted earnings per share increased 250.6% year over year to $8.45.
VLO’s revenue is expected to grow 2.1% year-on-year to $39.34 billion for the current quarter ending March 2023. The company’s earnings per share for the same quarter are expected to increase 184% year over year to $6.56.
Shares of VLO are up 22% over the past six months to close the last trading session at $128.09.
VLO’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of A, which is a Strong Buy in our proprietary rating system.
The stock has an A rating for momentum and a B rating for growth, quality, and value. It ranks 4th out of 93 stocks within the B-rated energy oil and gas industry.
Beyond the above, we also rated VLO for stability and vibes. Get all VLO ratings here.
ARC Document Solutions, Inc. (ARC)
ARC, a digital printing company, provides digital printing and document-related services in the United States. It provides managed print services that deploy, manage, and optimize printing and imaging equipment in customer offices, construction sites, and other facilities; and cloud-based document management software and other digital hosting services.
On December 8, 2022, ARC announced a quarterly cash dividend of $0.05 per share, payable February 28. The company pays a dividend of $0.20 annually, which translates to a yield of 5.87% at the current price, ahead of the 4-year average dividend yield of 2.17%.
ARC net sales increased marginally year-on-year to $73.14 million for the third quarter ended September 30, 2022. The company’s adjusted earnings per share rose 12.5% year over year to $0.09, while adjusted net income rose 15.6% year over year to $3.70 million.
The stock is up 39.6% over the past three months to close the last trading session at $3.63.
ARC’s robust outlook is reflected in its POWR ratings. The stock has an overall rating of A, which is a Strong Buy in our proprietary rating system.
ARC has an A grade for Value, Vibe and Quality. It ranks first out of 42 stocks in the B-rated outsourcing business services industry.
Click here to see the additional POWR ratings for ARC (Growth, Momentum and Stability).
Consider this before placing your next trade…
We are still in the middle of a bear market.
Yes, some special stocks may go up. But most will fall as the bear market digs deeper.
That’s why you need to discover the brand new”Stock trading plan for 2023‘ created by 40-year investment veteran Steve Reitmeister. There he explains:
- Why it’s still a bear market
- How low stocks will go
- 9 easy trades to profit on the way down
- Bonus: 2 trades with 100%+ upside if the bull market returns
You owe it to yourself to watch this timely presentation before placing your next trade.
Stock trading plan for 2023 >
GILD Shares . Year-to-date, GILD is up 0.59% versus a 7.16% gain for the benchmark S&P 500 index over the same period.
About the author: Kritika Sarmah
Her interest in risky instruments and her passion for writing made Kriti an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently completing the CFA program. With her fundamental approach, she wants to help investors to identify untapped investment opportunities.
More…
The post 3 must-have dividend stocks for 2023 appeared first StockNews.com
