Hot economic data and rekindled price pressures are expected to keep the stock market highly volatile, with the Fed minutes signaling continued rate hikes in upcoming meetings. Amid this backdrop, investing $1,000 in fundamentally sound and dividend-paying stocks Walmart (WMT), Novartis (NVS), and Albertsons (ACI) could make you richer this year. Read more….
Markets have been highly volatile lately amid concerns over the prospect of consecutive rate hikes and other macro headwinds. Despite volatile market conditions, investing $1,000 in stocks with a robust fundamental profile and an attractive dividend record, Walmart Inc. ( WMT ), Novartis AG ( NVS ), and Albertsons Companies, Inc. ( ACI ) could ensure a stable stream of income and make you richer this year.
The January Consumer Price Index (CPI) report revealed that inflation rose 0.5% month-on-month and 6.4% from a year ago, exceeding Dow Jones Economists' expectations of 0.4% and 6.2% increases, respectively.
Moreover, stronger-than-expected economic data, including strong retail sales and a robust labor market, sparked renewed concerns about the Federal Reserve's prolonged hawkishness.
While the Fed approved a smaller 25-basis-point rate increase at its first meeting of this year, the Fed minutes said that the reduced pace in rates came with the heightened concern that inflation is still a threat as it "remained well above" the Fed's 2% target. Minutes said the participants resolved to fight stubborn inflation with further interest rate hikes.
Furthermore, the Fed's staff economists have warned that the U.S. economy could enter a recession this year . Given this backdrop, fundamentally strong WMT, NVS, and ACI might be solid buys in 2023.
Walmart Inc. ( WMT )
WMT operates retail, wholesale, and other units worldwide. Its segments include Walmart U.S.; Walmart International; and Sam's Club. The company runs warehouse clubs, supermarkets, discount stores, cash and carry outlets, and membership-only warehouse clubs. Additionally, it conducts online business under 46 distinct banners.
On February 21, 2023, WMT approved a $2.28 annual cash dividend per share for 2024, an increase of about 2% over the $2.24 per share paid for the previous fiscal year.
WMT's annual dividend of $2.28 yields 1.55% on the current price level. Its four-year average yield is 1.68%, and its dividend payouts have grown at a 1.9% CAGR over the past three years. The company has a record of 49 years of consecutive dividend growth.
Moreover, on January 12, 2023, Walmart Commerce Technologies and Walmart GoLocal announced a collaboration with Salesforce, Inc. ( CRM ) to offer businesses access to the tools and resources that facilitate frictionless local pickup and delivery for clients. The company should benefit from the improved customer experience.
WMT's total revenues grew 7.3% year-over-year to $164.05 billion in the fiscal 2023 fourth quarter that ended January 31, 2023. Its income before income taxes rose 86.2% from the prior year's quarter to $8.90 billion. Also, the company's consolidated net income grew 59.9% from the year-ago value to $5.81 billion, while adjusted EPS came in at $1.71, up 11.8% year-over-year.
The consensus revenue estimate of $649.16 billion for the fiscal year ending January 2025 reflects a 3.5% year-over-year improvement. The consensus EPS estimate of $6.82 for the same year indicates a 10.4% rise from the previous year. Moreover, WMT surpassed its consensus EPS estimates in three of four trailing quarters.
Shares of WMT have gained 7.2% over the past six months to close the last trading session at $144.24.
WMT's POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Stability and a B for Quality and Growth. In the A-rated 38-stock Grocery/Big Box Retailers industry, it is ranked #4.
Beyond what we stated above, we also have WMT's ratings for Value, Sentiment, and Momentum. Get all WMT ratings here .
Novartis AG ( NVS )
Headquartered in Basel, Switzerland, NVS researches, manufactures, and markets healthcare products. Its segments include Innovative Medicines and Sandoz. The company develops and sells finished dosage forms of small-molecule pharmaceuticals to third parties and provides prescription medications for patients and physicians.
On January 24, 2023, Sandoz, a division of NVS and the global leader in off-patent medicines, signed an agreement with Astellas to acquire worldwide product rights for the leading systemic antifungal agent Mycamine®. The addition of Mycamine® should improve Sandoz's hospital offering and complement its existing position as the industry leader in generic antibiotics.
Also, on November 7, 2022, Sandoz announced an extra €50 million ($53.10 million) investment to support increased European production capacity for Finished Dosage Form (FDF) penicillins. The funding is expected to assist in meeting the expanding patient demand as antibiotics continue to be the cornerstone of modern medicine. This should boost the company's growth and profitability.
For the fiscal fourth quarter that ended December 31, 2022, NVS' other revenues increased 35.5% year-over-year to $397 million, while its core operating income rose 5.5% from the year-ago value to $4.03 billion. The company's core net income and EPS grew 3.7% and 8.6% from the prior year's quarter to $ 3.25 billion and $1.52, respectively.
Additionally, NVS' free cash flow came in at $3.55 billion, up 17.3% year-over-year.
NVS pays a $3.47 dividend annually, translating to a 4% yield on the current price level. Its four-year average yield is 3.58%, and its dividend payments have grown at a 5.5% CAGR over the past three years.
Analysts expect NVS' revenue to increase 3.9% year-over-year to $52.51 billion for the fiscal year ending December 2023. The company's EPS for the current year is expected to rise 7.5% from the prior year to $6.58. The stock has gained 2.7% over the past six months to close the last trading session at $86.68.
NVS' solid fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
NVS has an A grade for Stability and a B for Value, Sentiment, and Quality. It ranks #3 in the 173-stock Medical - Pharmaceuticals industry.
In addition to the POWR Ratings I've just highlighted, you can see NVS ratings for Growth and Momentum here .
Albertsons Companies, Inc. ( ACI )
ACI operates food and drug stores. Its food and drug retail outlets offer groceries, general merchandise, health and beauty care products, pharmacy, fuel, and a broad range of additional goods and services. It also manufactures and processes food items for retail sale.
On February 6, 2023, ACI launched Sincerely Health, a digital health and wellness platform. Sincerely Health is backed by science and is intended to help better lives by connecting, educating, and rewarding customers on their health and wellness journeys. This launch could lead to increased growth and revenue for the company. Additionally, the business might benefit from improved customer experiences.
Furthermore, on October 14, 2022, ACI and The Kroger Co. ( KR ) announced their definitive agreement to merge two complementary enterprises with iconic brands and deep roots in their local communities. This combination is expected to broaden customer reach and improve proximity, bringing fresh and affordable food to roughly 85 million households.
With this merger, ACI should be able to expand its customer base and strengthen its position as a more compelling alternative to larger, non-union opponents. Also, the combined company is expected to generate more profitable growth for the company's shareholders.
ACI's net sales and revenue for its third quarter of fiscal 2022, which ended December 3, increased 8.5% year-over-year to $18.15 billion. Its adjusted EBITDA rose 10.2% year-over-year to $1.16 billion. Moreover, the company's adjusted net income stood at $505.10 million, a 10.5% year-over-year increase, and its adjusted EPS grew 10.1% from the prior-year quarter to $0.87.
ACI's annual dividend of $0.48 yields 2.25% on the current price level. Its four-year average yield is 5.74%.
Analysts expect ACI's revenue to increase 8.1% year-over-year to $77.70 billion for the fiscal year ending February 2023. The company's EPS for the same year is expected to grow 4.5% from the previous year to $3.21. Moreover, ACI surpassed its consensus revenue estimates in all four trailing quarters, which is impressive.
Shares of ACI have gained 1.3% over the past five days to close the last trading session at $21.38.
ACI's POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Sentiment, Quality, and Value. Within the Grocery/Big Box Retailers industry, it ranks #7 of 38 stocks
To see additional POWR Ratings for Growth, Stability, and Momentum for ACI, click here .
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WMT shares were trading at $141.91 per share on Thursday morning, down $2.33 (-1.62%). Year-to-date, WMT has gained 0.08%, versus a 4.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program.She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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