The stock market has been suffering since the beginning of the year due to various macroeconomic factors. The multi-decade high inflation and the Fed’s intention to fight it by raising interest rates several times this year have adversely affected the stock market. Moreover, according to many analysts, if the Fed’s battle against inflation continues, the U.S. economy could potentially tip into a recession. According to Larry Harris, the Fred V. Keenan Chair in Finance, “It’s very hard to stop inflation without a recession.”
In addition, a slower economic growth, aggravated supply chain constraints, the Ukraine-Russia war, and higher energy prices have also contributed to the current market volatility. The S&P has plunged 19% from its January 3 record. Amid this situation, investors may resort to dividend-paying stocks to protect their portfolios from short-term market volatility by ensuring a consistent income source.
Therefore, we think it could be wise to invest in fundamentally sound stocks Northrop Grumman Corporation (NOC) and Petróleo Brasileiro S.A. - Petrobras (PBR), which have recently increased their dividends. These stocks have also been rated a Buy in our proprietary POWR Ratings system.
Northrop Grumman Corporation (NOC)
Headquartered in Falls Church, Virginia, NOC operates internationally as an aerospace and defense company. The company's Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems. This segment also provides unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems.
The board of directors of NOC declared a quarterly dividend of $1.73, which is an increase of about 10% from its prior dividend. The dividend is payable on June 15, 2022, to shareholders of record as of the close of business on May 31, 2022.
Its $6.92 annual dividend yields 1.6% at the current share price. Also, it has a four-year average dividend yield of 1.6%. Its dividend payouts have increased at an 11.8% CAGR over the past five years.
In the first quarter ended March 31, 2022, the total sales of NOC amounted to $8.80 billion. Its total operating income amounted to $897.00 million, while its net earnings came in at $955.00 million. The company's EPS stood at $6.10.
Analysts expect NOC’s revenue to increase 5.9% year-over-year to $9.23 billion in the third quarter ending September 2022. The consensus EPS estimate of $6.38 for the fourth quarter ending December 2022 represents a 6.4% improvement year-over-year. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 14.5% year-to-date and 25.5% over the past six months.
NOC's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Sentiment and Stability. Within the Air/Defense Services Industry, it is ranked #9 of 76 stocks.
To see additional POWR Ratings for Value, Quality, Growth, and Momentum for NOC, click here.
Petróleo Brasileiro S.A. - Petrobras (PBR)
Headquartered in Rio de Janeiro, Brazil discovers, produces, and sells oil and gas in Brazil and internationally. Exploration and Production; Refining, Transportation and Marketing; Gas and Power; and Corporate and Other Businesses segments are the operational segments of the company.
The board of directors of PBR announced a dividend of $1.2984 per share on May 17, increasing $0.5894 from the previous dividend. This represents a dividend yield of 28.6%.
PBR paid an annual dividend of $0.61 on September 1, 2021. Its $0.91 annual dividend yields 4% at the current share price. Also, it has a four-year average dividend yield of 4%.
For the first quarter ending March 31, 2022, PBR’s sales revenues increased 64.4% year-over-year to R$141.64 billion ($29.01 billion). The operating income improved 93.3% from its year-ago value to R$63.58 billion ($13.02 billion), while its net income grew 3409.6% from its prior-year quarter to R$44.78 billion ($9.17 billion).
The consensus EPS estimate of $0.94 for the third quarter ending September 2022 represents a 99.1% improvement year-over-year. Analysts expect revenue to increase 54.9% year-over-year to $32.84 billion for the second quarter ending June 2022. The company's shares have surged 40.4% year-to-date and 52.7% over the past nine months.
PBR's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. PBR has an A grade for Quality and Momentum. Within the A-rated Foreign Oil & Gas industry, it is ranked #15 of 41 stocks.
In total, we rate PBR on eight different levels. Click here to see additional PBR POWR Ratings for Growth, Value, Sentiment, and Stability.
NOC shares were trading at $454.97 per share on Monday afternoon, up $11.64 (+2.63%). Year-to-date, NOC has gained 18.01%, versus a -16.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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