After the Federal Reserve’s first interest rate hike in three years last week, Jerome Powell’s plan to raise rates more aggressively this year, if needed, dampened investor sentiment yesterday. Thus…
dividend investing is expected to gain popularity in response to the uncertain market conditions.
Dividend stocks with strong earnings growth potential from companies with robust financials could witness price appreciation in the coming months. So, these stocks could be ideal picks for investors. And investors’ interest in dividend stocks is evident in the iShares Select Dividend ETF’s (DVY) 6.3% returns over the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 4% decline.
Wall Street analysts expect fundamentally sound dividend stocks Ambev S.A. (ABEV – Get Rating), Silicon Motion Technology Corporation (SIMO – Get Rating), and Diana Shipping Inc. (DSX – Get Rating) to rally more than 55% in the coming months. So, these stocks could be solid additions to one’s portfolio.
Ambev S.A. (ABEV – Get Rating)
Based in Sao Paulo, Brazil, ABEV and its subsidiaries produce, distribute, and sell beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food products in the Americas. Its four segments are Brazil; Central America and the Caribbean; Latin America South; and Canada.
ABEV’s four-year average dividend yield is 3.36%, and its current dividend translates to a 2.93% yield.
For its fourth quarter, ended Dec. 31, 2021, ABEV’s net revenue increased 18.6% year-over-year to R$22.01 billion ($4.34 billion). Its gross profit came in at R$11.51 billion ($2.27 billion), up 11.2% year-over-year. And the company’s total assets came in at R$138.60 billion (27.31 billion) for the period ended Dec. 31, 2021, compared to R$125.20 billion ($24.67 billion) for the period ended Dec. 31, 2020.
Analysts expect ABEV’s revenue to increase 15.4% year-over-year to $15.58 billion in its fiscal year 2022. Its EPS is estimated to grow 9.6% per annum for the next five years. Over the past three months, the stock has gained 7.5% in price to close yesterday’s session at $2.86. Wall Street analysts expect the stock to hit $5.00 in the near term, which indicates a potential 74.8% upside.
ABEV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ABEV has an A grade for Quality and a B for Stability and Sentiment. Within the B-rated Beverages industry, it is ranked #11 out of 37 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for ABEV.
Silicon Motion Technology Corporation (SIMO – Get Rating)
Based in Kowloon, Hong Kong, SIMO is a global leader in supplying NAND flash controllers for solid-state storage devices and the merchant leader in supplying SSD controllers. The company designs, develops, and markets NAND flash controllers for solid-state storage devices.
On January 26, 2022, Wallace Kou, SIMO’s President and CEO said, “This year, similar to last year, we further expanded and strengthened our SSD controller program engagements with PC OEMs and eMMC/UFS controllers for smartphones, automotive applications, and IoT/smart devices. We are adding to this positive momentum the upcoming launch of our next-generation enterprise-class SSD controllers.”
SIMO’s dividend payout has grown at a 12.3% CAGR over the past three years. Its four-year average yield is 2.73%, while its current yield is 2.86%.
For its fiscal fourth quarter, ended Dec. 31, 2021, SIMO’s net sales increased 83.7% year-over-year to $264.36 million. The company’s non-GAAP net income came in at $67.54 million, up 125.8% year-over-year. Also, its non-GAAP EPS was $1.90, up 120.9% year-over-year.
SIMO’s revenue is expected to be $1.14 billion in its fiscal year 2022, representing a 24.1% year-over-year rise. In addition, the company’s EPS is expected to increase 29.5% year-over-year to $8.04 in 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 10.5% to close yesterday’s trading session at $69.94. Wall Street analysts expect the stock to hit $120.60 in the near term, which indicates a potential 72.4% upside.
It is no surprise that SIMO has an overall…
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