Although the Fed is expected to go slow with rate hikes, they are not expected to end anytime soon. Moreover, the possibility of a recession cannot be ruled out yet. Given the uncertainties, fundamentally sound dividend stocks Pfizer (PFE) and Sisecam (SIRE) could be a solid addition to your portfolio for a stable income stream. Keep reading.
The Federal Reserve raised its benchmark interest rate by a quarter percentage point recently, which indicated that it is seeing progress in its battle with inflation. This came after a series of outsized rate increases over the last year. While inflation is cooling, it is still far from the Fed’s target.
In addition, the January job report showed explosive job growth, with nonfarm payrolls increasing by 517,000, far higher than the 187,000 market estimate. Given the tight labor market, Minneapolis Fed President Neel Kashkari stated that the central bank has not made sufficient progress and anticipates that the Fed funds rate will climb to 5.4%.
According to Tiffany Wilding, PIMCO North American economist, the strong economic data suggests that a recession may come later than previously expected, but it remains likely.
Considering the uncertain macroeconomic environment, dividend-paying stocks may be appealing investment options to ensure a reliable income stream. Investors’ interest in dividend stocks is evident from the SPDR S&P Dividend ETF’s (SDY) 4.5% returns over the past three months.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On January 6, 2023, PFE announced that the US Food and Drug Administration (FDA) has accepted for priority consideration of a supplemental Biologics License Application (sBLA) for its 20-valent pneumococcal conjugate vaccine candidate (20vPnC) for the prevention of invasive pneumococcal illness (IPD).
The FDA’s designation of Priority Review shortens the usual sBLA review term by four months. This should be a significant achievement for the company.
Moreover, in December 2022, PFE announced that the European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA) had accepted its regulatory filings for Etrasimod for those with mild to moderately active ulcerative colitis (UC). It is being researched for a number of immuno-inflammatory illnesses in addition to UC.
PFE has paid dividends for 33 consecutive years. Over the last three years, PFE’s dividend payouts have grown at a 5.2% CAGR. While PFE’s four-year average dividend yield is 3.63%, and its current dividend translates to a 3.73% yield.
PFE’s revenues came in at $24.29 billion for the fourth quarter that ended October 2, 2022, up marginally year-over-year. Its income from continuing operations came in at $5 billion, up 39.7% year-over-year, while its EPS came in at $0.87, up 47.5% year-over-year.
Analysts expect PFE’s revenue to increase 2.2% year-over-year to $70.21 billion in 2024, while its EPS is expected to increase 12.5% year-over-year to $3.79. It surpassed EPS estimates in all four trailing quarters. PFE’s shares have lost marginally intraday to close the last trading session at $43.34.
PFE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Quality. Within the Medical – Pharmaceuticals industry, it is ranked #26 out of 172 stocks. Click here to access the additional POWR Ratings for PFE (Stability, Growth, Momentum, and Stability).
Sisecam Resources LP (SIRE)
SIRE engages in the trona ore mining and soda ash production businesses internationally. It processes trona ore into soda ash, a raw material in flat glass, container glass, chemicals, paper, and other consumer and industrial products.
SIRE’s EBIT margin of 18.59% is 42.1% higher than the industry average of 13.08%. Also, its ROCE of 30.39% is 119.4% higher than the industry average of 13.85%.
Its trailing-12-month Price/Sales of 0.72x is 36.6% lower than the industry average of 1.13x, while its trailing-12-month EV/Sales multiple of 1.14 is 23% lower than the industry average of 1.48.
Over the last three years, SIRE’s dividend payouts have grown at 10.7% CAGR. While SIRE’s four-year average dividend yield is 7.13%, its current dividend translates to a 7.83% yield.
SIRE’s total net sales came in at $177.10 million for the fourth quarter ended December 31, 2022, up 13.5% year-over-year. Its net income increased 43.6% year-over-year to $16.80 million. Moreover, its EPS came in at $0.83, up 48.2% year-over-year.
SIRE has gained 41.6% over the past nine months to close the last trading session at $25.55.
It’s no surprise that SIRE has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
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PFE shares were unchanged in premarket trading Friday. Year-to-date, PFE has declined -14.64%, versus a 6.45% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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