Despite a decline in inflation in July, lingering concerns about a potential recession could keep the market volatile in the coming months. Therefore, investing in dividend stocks AbbVie (ABBV), Emerson Electric (EMR) and Becton Dickinson (BDX) can make sense to navigate market volatility with solid passive income. Let’s discuss….
The economy has slowed for two consecutive quarters this year due to rising interest rates. While the fall in inflation in July from its multi-decade highs offers investors some relief, 8.5% CPI level is still uncomfortable for policymakers. High inflation and a red-hot job market could prompt the Fed to maintain its aggressive stance. The market is therefore expected to remain volatile.
Against this backdrop, dividend stocks are gaining popularity among investors because they provide a steady stream of passive income. Investor interest in dividend stocks is evident in the iShares Core High Dividend ETFs (HDV) 6.5% return over the past year.
Therefore, investors looking to generate passive income may want to consider investing in AbbVie Inc. to add (ABBV), Emerson Electric Co. (EMR), and Becton, Dickinson and Company (BDX) to their portfolios. These stocks have consistently increased their dividends for years.
AbbVie Inc. (ABBV)
ABBV is active worldwide in the development, production and sale of pharmaceuticals. It offers its products in several categories: immunology, oncology, neuroscience, eye care and women’s health care. The company sells its products to wholesalers, distributors, government agencies, healthcare facilities and independent retailers.
ABBV’s average four-year dividend yield is 4.63% and the current dividend translates into a yield of 4%. Dividends have grown at 9.9% CAGR over the past three years and 17.5% CAGR over the past five years. The company has increased its dividend for eight consecutive years.
On July 26, 2022, the European Commission approved the company’s RINVOQ (upadacitinib) for the treatment of adults with moderate to severe ulcerative colitis who had an inadequate response and stopped responding or who were intolerant of conventional therapy or a biologic agent. This approval should strengthen ABBV’s ability to treat patients with ulcerative colitis.
ABBV’s net income increased 4.5% year over year to $14.58 billion in the second quarter ended June 30, 2022. The company’s non-GAAP net income increased 10.7% relative to value from a year ago to $6 billion, while the adjusted EPS rose 11.2% from the same quarter last year to $3.37.
Analysts expect ABBV’s third-quarter earnings and revenue to grow 8.1% and 4.5% year-over-year to $3.60 and $14.99 billion, respectively, in the third quarter ended September 30, 2022 . It beat Street EPS estimates in each of the next four quarters. ABBV has gained 22.7% over the past year to close the last trading session at $140.94.
ABBV’s strong foundations are reflected in its POWR ratings. The company has an overall rating of A, which translates to a strong buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor being optimally weighted.
It also has an A grade for quality and a B for growth and value. It is also number 9 out of 172 shares in the Medical – Medicines industry. To see additional POWR ratings for momentum, stability and sentiment for ABBV, click here.
Emerson Electric Co. (EMR)
EMR produces and sells technology and engineering products worldwide for industrial, commercial and consumer markets. The company operates through the Automation Solutions and Commercial & Residential Solutions segments.
On July 27, 2022, EMR’s subsidiary Aspen Technology, Inc. (AZPN) announced the acquisition of Micromine, an end-to-end mining software provider. This acquisition will diversify AZPN’s footprint in the metals and mining market through end-to-end software vendors and accelerate EMR’s long-term growth prospects.
On August 2, 2022, the company’s board of directors announced a quarterly cash dividend of $0.51 per common stock, payable September 9, 2022.
EMR has increased dividends for 25 consecutive years. Dividend payments have increased at a CAGR of 1.67% over the past three years and at a CAGR of 1.42% over the five years. The current dividend translates into a return of 2.35%, while the average return over four years is 2.68%.
During the fiscal third quarter ended June 30, 2022, EMR net sales increased 6.5% year over year to $5 billion. EBIT increased 52.4% year-over-year to $1.19 billion. The company’s net income grew 46.9% from a year ago value to $921 million, while adjusted earnings per share grew 16% from the same quarter last year to $1.38. Also, adjusted EBITA increased 21.3% year-over-year to $1.14 billion.
Analysts expect EMR revenue for the fourth quarter ended September 30, 2022 to grow 9.3% year-over-year to $5.41 billion. Street expects earnings per share to rise 17.4% year-over-year to $1.42 in the current quarter. It beat EPS estimates in each of the next four quarters. The stock gained 8.5% last month and closed its last trading session at $87.03.
EMR’s POWR Ratings reflect a solid outlook. According to our own rating system, it has an overall rating of B, which translates to a buy.
Becton, Dickinson and Company (BDX)
BDX is engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products. The company operates through three business segments: BD Medical, BD Life Sciences and BD Interventional.
BDX’s average four-year dividend yield is 1.28% and its annual dividend yield of $3.48 equates to a return of 1.35%. Dividends have increased by 4.2% and 4% CAGRs over the past three and five years, respectively. BDX has increased dividends for 49 consecutive years.
On August 9, 2022, BDX partnered with Laboratory Corp. of America Holdings (LH), a leading global life sciences company, to develop flow cytometry-based companion diagnostics for matching patients with treatments.
LH’s Scientific Director, Dr. Bill Hanlon, said: “Flow cytometry is a reliable and powerful tool for analyzing cells to better understand disease, and it has enormous untapped potential as a companion diagnostic in oncology and other therapeutic areas.” Analysts expect the combined capabilities of both companies to advance flow cytometry as an essential companion diagnostic modality for cancer and other diseases.
For the third quarter of fiscal 2022 ended June 30, 2022, BDX’s annualized revenue increased marginally to $4.64 billion. The company’s operating income came in at $537 million, up 9.1% from the same period last year, while adjusted earnings per share increased 16.7% year-over-year to $2.66.
For the fourth quarter ended September 30, 2022, BDX’s earnings per share are expected to increase 6.4% year-over-year to $2.75. Revenue is expected to grow 3.2% year over year to $19.43 billion for fiscal 2023. BDX surpassed Street EPS estimates in each of the next four quarters. Over the past year, the stock is up 11.1% to close its last trading session at $258.56.
BDX’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which is equivalent to a buy in our proprietary rating system. It has a B grade for growth, stability and sentiment.
ABBV shares traded at $141.01 per share Thursday morning, up $0.07 (+0.05%). Year-to-date, ABBV is up 7.11%, versus a -10.00% gain in the benchmark S&P 500 index over the same period.
Shweta’s deep interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help private investors make informed investment decisions.
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