Since the beginning of the year, the market has suffered significant volatility due to multi-decade high inflation, the Fed’s planned interest rate increases, and continuing supply chain disruptions. Russia’s invasion of Ukraine added fuel to the fire. The S&P 500 is down more than 8% year-to-date. Despite bouncing back from its lows, rising oil prices are expected to keep the benchmark indexes under pressure in the near term.
High-yield dividend stocks are known to provide a buffer against market volatility. Dividend-paying stocks are considered an efficient way to hedge one’s portfolio against market uncertainty. In addition to delivering high dividend yields, they typically hold capital appreciation potential. Investors’ interest in dividend stocks is evidenced by the Global X S&P 500 Quality Dividend ETF’s (QDIV) 7% returns over the past six months compared to the SPDR S&P 500 Trust ETF’s (SPY) 2.5% decline.
Given this backdrop, we think it could be wise to add quality high-yield dividend stocks Gilead Sciences, Inc. (GILD), Walgreens Boots Alliance, Inc. (WBA), Valero Energy Corporation (VLO), and Phillips 66 (PSX) to one’s watchlist. The dividends paid by these S&P 500 members yield 4% or more.
Gilead Sciences, Inc. (GILD)
Foster City, Calif.-based GILD is a biopharmaceutical company that is focused on advancing medicines to prevent and treat diseases that include human immunodeficiency virus, viral hepatitis, and cancer. The company’s portfolio of products and pipeline of investigational drugs includes treatments for HIV, COVID-19, liver diseases, and hematology/oncology/cell therapy.
On Feb. 16, 2022, GILD announced new one-year results from its ongoing Phase 2/3 CAPELLA trial to evaluate lenacapavir, its investigational, long-acting HIV-1 capsid inhibitor, in heavily-treatment-experienced people living with multi-drug resistant HIV. The findings revealed that lenacapavir, when administered subcutaneously every six months in combination with other antiretrovirals, achieved high rates of virologic suppression and clinically meaningful increases in CD4 counts in people with HIV.
Over the last three years, GILD’s dividend payout has grown at a 6.9% CAGR. Its four-year average dividend yield is 3.7%, and its current payout translates to a 5% yield. It is expected to pay a quarterly dividend of $0.73 per share on March 30, 2022.
GILD’s total revenues for its fiscal year 2021 increased 10.5% year-over-year to $27.30 billion. The company’s non-GAAP net income increased 2.5% year-over-year to $9.19 billion. And its non-GAAP EPS came in at $7.28, representing a 2.6% increase year-over-year.
Analysts expect GILD’s EPS and revenue for its fiscal 2023 to increase 0.3% and 0.4%, respectively, year-over-year to $6.57 and $24.61 billion. Over the past month, the stock has declined 6.3% to close the last trading session at $57.97.
GILD’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B grade for Quality. It is ranked #18 out of 424 stocks in the Biotech industry. Click here to see the other ratings of GILD for Growth, Momentum, Stability, and Sentiment.
Click here to checkout our Healthcare Sector Report for 2022
Walgreens Boots Alliance, Inc. (WBA)
WBA in Deerfield, Ill., operates as a pharmacy-led health and retail beauty company. It operates through Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale segments. The company’s retail and business brands portfolio includes Walgreens, Duane Reade, Boots, and global health and beauty product brands, including No7, NICE! Soap & Glory, Liz Earle Finest Nutrition, Botanics, Well Beginnings, Sleek MakeUP, and YourGoodSkin.
On Nov. 30, 2021, WBA announced that it would become the 100% owner of the GEHE Pharma Handel and Alliance Healthcare Deutschland joint venture after agreeing with McKesson Corporation (MCK) to acquire its 30% share. WBA’s COO, Ornella Barra, said, “We are very pleased to have agreed with McKesson to take full control of our German pharmaceutical wholesaling operations. This new, exciting step enables Walgreens Boots Alliance to strengthen further its position as a leading pharmaceutical wholesaler in Germany.”
Over the last three years, WBA’s dividend payout has grown at a 3.3% CAGR. Its four-year average dividend yield is 3.4%, and its current payout translates to a 4% yield.
For the fiscal first quarter, ended Nov. 30, 2021, WBA’s sales increased 7.8% year-over-year to $33.90 billion. The company’s non-GAAP net earnings increased 38.3% year-over-year to $1.45 billion. Also, its adjusted EPS came in at $1.68, representing an increase of 54.1% year-over-year.
For the quarter ending Feb. 28, 2022, WBA’s EPS is expected to increase 9.5% year-over-year to $1.38. Its revenue for its fiscal year 2023 is expected to increase 3.2% year-over-year to $135.76 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past month, the stock has declined 1% in price to close the last trading session at $47.38.
WBA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Value and Sentiment. Within the A-rated Medical – Drug Stores industry, it is ranked #2 of 4 stocks. To see the other ratings of WBA for Growth, Momentum, Stability, and Quality, click here.
Click here to checkout our Healthcare Sector Report for 2022
Valero Energy Corporation (VLO)
VLO is an international manufacturer and marketer of transportation fuels and petrochemical products. The San Antonio, Tex., company’s segments include Refining, Renewable Diesel, and Ethanol.
On Feb. 21, 2022, VLO announced that it had reduced its long-term debt by approximately $750 million through debt reduction and refinancing transactions. These transactions, which were completed in the third and fourth quarters of 2021 helped reduce VLO’s long-term debt by approximately $2 billion.
Over the last three years, VLO’s dividend payout has grown at a 5.9% CAGR. Its four-year average dividend yield is 5%, and its current payout translates to a 4.6% yield.
VLO’s revenues increased 116.2% year-over-year to $35.90 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted net income attributable to its shareholders came in at $1.01 billion, compared to an adjusted net loss of $429 million. Also, its adjusted EPS was $2.47, compared to a $1.06 adjusted loss per share.
Analysts expect VLO’s EPS for the quarter ending June 30, 2022, to increase 389.6% year-over-year to $2.35. Its revenue for the quarter ending March 31, 2022, is expected to increase 63.3% year-over-year to $30.45 billion. Also, it surpassed consensus EPS estimates in each of the trailing four quarters. And over the past six months, the stock has gained 29.7% in price to close the last trading session at $84.94.
VLO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Growth and Quality. It is ranked #11 of 87 stocks in the A-rated Energy – Oil & Gas industry. Click here to see the other ratings of VLO for Value, Momentum, Stability, and Sentiment.
Phillips 66 (PSX)
PSX is an energy manufacturing and logistics company with midstream, chemicals, refining, marketing, and specialties businesses. The Houston, Tex.-based company operates through the Midstream, Chemicals, Refining, and Marketing and Specialties (M&S) segments.
On Aug. 9, 2021, PSX announced that it had signed a technology development agreement with NOVONIX Limited to advance the production and commercialization of next-generation anode materials for lithium-ion batteries. The deal comes after PSX acquired a 16% stake in NOVONIX. PSX’s VP of Energy Research & Innovation, Ann Oglesby, said: “It sets the framework for the companies to work closely and collaboratively to accelerate the development of next-generation material for the U.S. battery supply chain.”
Over the last three years, PSX’s dividend payout has grown at a 14.9% CAGR. Its four-year average dividend yield is 4%, and its current payout translates to a 4.8% yield.
For the fourth quarter, ended Dec. 31, 2021, PSX’s revenues increased 98.8% year-over-year to $32.55 billion. The company’s adjusted earnings came in at $1.29 billion, compared to an adjusted loss of $507 million. Also, its adjusted EPS was $2.94, compared to a $1.16 adjusted loss per share.
For the quarter ending March 31, 2022, PSX’s EPS and revenue are expected to increase 247.4% and 49%, respectively, year-over-year to $1.71 and $32.67 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 16.3% in price to close the last trading session at $76.50.
PSX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Growth. It is ranked #19 in the Energy – Oil & Gas industry. To see the additional ratings of PSX for Value, Momentum, Stability, Sentiment, and Quality, click here.
GILD shares rose $0.13 (+0.22%) in premarket trading Thursday. Year-to-date, GILD has declined -18.96%, versus a -8.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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