The equity markets have remained under pressure since the beginning of 2022, with benchmark indexes down double digits year-to-date. However, markets are gradually absorbing the Fed’s tightening monetary policy, as evidenced by the S&P 500 index’s marginal gains over the past five days. Nonetheless, markets are expected to remain volatile, given the continuing geopolitical tensions and Fed’s aggressively hawkish tilt.
High-yielding dividend stocks are expected to shield investors from the ongoing market fluctuations. Their ability to pay steep dividends amid volatility indicates their financial strength. Furthermore, according to FactSet, dividends per share for the S&P 500 could grow 8% year-over-year, up from the 7% early January 2022 forecast. Investors’ interest in the high-yielding dividend stocks is evident in the iShares Core High Dividend ETF’s (HDV) 9.5% returns over the past six months.
Therefore, we think high-yielding dividend stocks British American Tobacco p.l.c. (BTI), Enterprise Products Partners L.P. (EPD) and BHP Group Limited (BHP) could be ideal bets.
British American Tobacco p.l.c. (BTI)
Headquartered in London, BTI provides tobacco and nicotine products to consumers worldwide. It offers vapor, tobacco heating, modern oral nicotine products; combustible products; and traditional oral products- such as snus and moist snuff.
On Feb. 11, 2022, Jack Bowles, Chief Executive, said, “The BAT of tomorrow will be a high-growth, consumer-centric, multi-category consumer goods company. We are confident in delivering a faster transformation, continued robust financial performance, and superior cash returns to shareholders.”
BTI has been paying dividends for 12 consecutive years. Its dividend payouts have grown at a 5.6% CAGR in the past five years. Its current dividend translates to a 6.93% yield, while its four-year average yield is 6.93%. On Feb. 11, 2022, BTI declared an interim dividend of 217.80p per ordinary share of 25p.
BTI’s adjusted revenue came in at £25.68 billion ($31.89 billion) for the year ended Dec. 31, 2021, up 6.9% year-over-year. Its adjusted profit from operations was £11.15 billion ($13.85 billion), up 5.2% year-over-year. Also, its adjusted EPS was 329.00p, up 6.6% year-over-year.
BTI’s revenue is expected to increase by 3.9% year-over-year to $34.33 billion for its fiscal year, ending Dec.31, 2023. Its EPS is expected to grow at 8.9% per annum for the next five years. Over the past six months, the stock has gained 24.7% in price to close yesterday’s trading session at $43.63.
BTI’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
BTI has a B grade for Stability and Sentiment. Within the B-rated Tobacco industry, it is ranked #4 of 10 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Quality for BTI.
Enterprise Products Partners L.P. (EPD)
EPD in Houston, Tex., provides midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.
On Feb. 17, 2022, EPD completed a $3.25 billion acquisition of Navitas Midstream Partners, LLC. This move is expected to help the company generate broad margins in the coming quarters.
EPD has been paying dividends for 23 consecutive years. Over the past five years, EPD’s dividend payouts have grown at a 2.3% CAGR. Its current dividend translates to a 7.03% yield, while its four-year average yield is 7.57%. On April 7, 2022, EPD declared a $0.47/unit dividend.
EPD’s revenues have increased 42.1% year-over-year to $13.01 billion for the first quarter, ended March 31, 2022. Its adjusted EBITDA came in at $2.26 billion, compared to $2.25 billion in the year-ago period. And its net cash flow provided by operating activities was $2.15 billion, up 6% year-over-year.
For its fiscal year 2022, analysts expect EPD’s revenue to be $48.33 billion, representing an 18.4% year-over-year rise. The company’s EPS is expected to increase 15.4% to $0.6 for the quarter ended Sept. 30, 2022. Over the past nine months, the stock has gained 20.6% in price to close yesterday’s trading session at $26.80.
EPD’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system.
Also, the stock has an A grade for Momentum and a B grade for Stability and Sentiment. Within the A-rated MLPs - Oil & Gas industry, it is ranked #10 of 33 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Quality for EPD.
BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. It operates through Petroleum; Copper; Iron Ore; and Coal segments.
On Feb. 15, 2022, BHP’s CEO, Mike Henry, said, “We have announced an interim dividend of $1.50/share, bringing total shareholder returns to more than $22 billion over the past 18 months. Our record interim dividend was supported by our reliable operating performance and continued strong markets for a number of our products.”
BHP has been paying dividends for 13 consecutive years. Its dividend payouts have grown at a 45.3% CAGR over the past five years. Its current dividend translates to a 10.68% yield, while its four-year average yield is 6.80%.
BHP’s attributable profit came in at $9.44 billion for the half-year ended Dec. 31, 2021, up 143.6% year-over-year. Its underlying EBITDA came in at $18.46 billion, up 33% year-over-year. In addition, its EPS came in at 186.60 cents, up 143.6% year-over-year.
For its fiscal period ending June 30, 2022, analysts expect BHP’s revenue to increase 10.6% year-over-year to $67.24 billion. Over the past six months, the stock has gained 25.3% in price to close yesterday’s session at $65.55.
BHP has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has a B grade for Stability and Quality. Within the Industrial - Metals industry, it is ranked #2 of 37 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for BHP.
Click here to check out our Industrial Sector Report for 2022
BTI shares were trading at $43.44 per share on Wednesday morning, down $0.19 (-0.44%). Year-to-date, BTI has gained 18.18%, versus a -15.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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