Dividend stocks are perfect for this environment with a shaky economy and dovish Fed. Investors may want to consider stocks offering a steady stream of income. Though several companies had to cut or suspend their dividend payments due to the impact of the pandemic on their businesses, some have been able to maintain or increase their dividends based on their ability to maintain their financial health.
The Vanguard High Dividend Yield ETF (VYM) has gained 9.4% over the past six months, indicating that some high dividend-paying stocks have delivered decent price returns as well. So, ensuring capital appreciation potential is important while betting on dividends stocks. And this is where the Robinhood 100 Most Popular list could be helpful, as the popularity of these stocks could help them stay afloat.
Coca-Cola Company (KO)
The world's largest beverage company KO needs no introduction. Operating in Europe, Middle East & Africa, Latin America, North America, and the Asia Pacific, the company has over 500 beverage brands and sells in over 200 countries. KO also owns four of the world's top five nonalcoholic sparkling soft drink brands: Coca-Cola, Diet Coke, Fanta, and Sprite. KO is on the Robinhood 100 Most Popular list having 81% of the analyst ratings as ‘Buy.’
The stock has been consistently paying dividends each quarter for more than three decades. In the last five years, dividend payout for KO grew at a CAGR of 5.6%. The four-year average dividend yield for KO is 3.4% and the current dividend also translates into the same yield. The most recent dividend declared by the company was $0.41 payable on December 15th, amounting to an annual dividend of $1.64.
While KO was also deeply affected by the pandemic, it has tried to accelerate its transformation. All of its Costa Stores opened in China in the third quarter ended in September 2020. It opened 95% of its stores in the United States. Operating profit increased to 30.4% for the third quarter. For its North America segment, Price/mix increased 4% while operating income increased 14%.
Analysts expect KO’s revenue to increase by 10% next year. The company’s EPS is expected to increase by 11.6% next year and at a rate of 3.3% per annum over the next five years. KO has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
Ahead of the holiday season, the Coca-Cola Holiday 2020 Instant Win and Sweepstakes began this month and will continue through December. The company also transitioned to 100% recycled packaging of the locally produced beverage brands in the Netherlands and Norway. The stock gained 36.3% since hitting its 52-week low on March 23rd and is currently trading 21.6% below its 52-week high.
How does KO stack up for the POWR Ratings?
B for Trade Grade
A for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #2 out of 29 stocks in the Beverages industry.
Pfizer, Inc. (PFE)
One of the leading companies in the biotechnology and pharmaceutical industry, PFE operates mainly through three segments — Global Innovative Pharmaceutical (GIP), Global Vaccines, Oncology and Consumer Healthcare (VOC), and Global Established Pharmaceutical (GEP). PFE and its partner BIONTECH SE (BNTX) are currently leading the race for a Covid-19 vaccine. Kate Bingham, the chair of the UK Vaccine Taskforce, said that she hoped to see positive interim COVID-19 vaccine data from the company as soon as December. PFE is on the Robinhood 100 Most Popular list having 47% of the analyst ratings as ‘Buy.’
PFE has an annual dividend yield of 4.1%. The company declares dividends each year during its first quarter and has a strong dividend history for more than 30 years now. The company announced a dividend of $0.38 payable on December 1st. Over the last five years, PFE’s dividend has grown at a CAGR of 6.7% and the four-year average dividend yield is 3.8%.
PFE’s Biopharma revenues increased 4% operationally to $10.2 billion for the third quarter ended September 2020. It was primarily driven by the growth in global revenues from Vyndaqel which increased 125% operationally to $351 million. Driven by the Consumer separation, lower enabling function spending, and reduced sales/marketing costs due to COVID brought down the selling, informational and administrative (SI&A) expenses by 10% operationally to $2,869 million.
Analysts expect PFE’s revenue to increase by 1.8% for the quarter ending December and 7% next year. The company’s EPS is expected to increase by 7.3% for the about-to-be-reported quarter, 10% next year, and at a rate of 3.7% per annum over the next five years. PFE’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
On Thursday, Scott Morrison, the Prime Minister of Australia said that the Government will buy 10 million vaccine doses from PFE and Biontech. MYL and PFE received the consent from U.S. Federal Trade Commission regarding the proposed spin-off of its Upjohn Business and the subsequent combination of Mylan and the Upjohn Business to form Viatris Inc. It is expected to close on November 16th. The stock gained 30.5% since hitting its 52-week low in March to close yesterday’s session at $36.29.
PFE’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade and Industry Rank. Among the 240 stocks in the Medical - Pharmaceuticals industry, it’s ranked #7.
Starbucks Corporation (SBUX)
Based in Seattle, Washington, the world’s dominant coffee house chain SBUX is known for more than its specialty coffee. The company offers its products under the Starbucks, Teavana, Seattle's Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi brand names. The company has been able to recover owing to its focus on digital ordering and wellness-centered menu innovation. On a year-to-date basis, SBUX has rallied 2.1% to close yesterday’s session at $90.62. SBUX is on the Robinhood 100 Most Popular list having 44% of the analyst ratings as ‘Buy.’
The company started paying dividends in 2010. SBUX declared a dividend of $0.45 payable on November 27th, which is 10% higher than its previous quarterly dividend amount. In the last five years, dividend payout for SBUX grew at a CAGR of 22.1%. While the four-year average dividend yield for SBUX is 1.9%, the current dividend translates to a 1.8% yield.
SBUX opened 480 net new stores in the fourth quarter ended September 27th, 2020, yielding 4% year-over-year growth. The company adjusted itself to the “new normal” and in the fourth quarter, 75% of its sales volume in the United States came from the drive-thru and Mobile Orders, balanced with expanded in-store seating in stores where it is safe. The number of active Starbucks Rewards (SR) members increased by 10% year-over-year to 19.3 million.
Analysts expect SBUX’s revenue to increase by 21.1% in 2021 and 6.4% in 2022. The company’s EPS is expected to increase 139.3% in the current fiscal year, 17.1% next year, and at a rate of 46.6% per annum over the next five years. SBUX’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
Ahead of the holiday season, SBUX will offer red collectible holiday cups with orders beginning November 6th. The stores are also back with holiday food and beverages like Peppermint Mocha and Cranberry Bliss Bar. The company also has plans to expand into Laos as part of its Asian expansion plan.
It’s no surprise that SBUX is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 49-stock Restaurants industry, it is ranked #1.
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KO shares were trading at $49.44 per share on Friday afternoon, down $0.00 (0.00%). Year-to-date, KO has declined -8.34%, versus a 10.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.The 3 Best Dividend Stocks in the Robinhood 100 appeared first on StockNews.com