The U.S. market is exhibiting heightened volatility amid inflationary pressures and the Fed’s interest rate hikes. This is evident in the CBOE Volatility Index’s 46.1% year-to-date gains. Furthermore, a solid May jobs report eliminated expectations of a pause in the…
central bank’s aggressive policy tightening. “It’s telling us the economy is in fairly good shape, which is good news, but when viewed in the context of what it means for the Federal Reserve and tightening monetary policy, it likely makes them more confident they can continue to tighten,” said Shawn Snyder, head of the investment strategy at Citi Personal Wealth Management.
Given the market fluctuations and rising investor’ worries, investors are likely to invest in attractive, dividend-paying stocks to hedge their portfolios. Indeed, the SPDR S&P Global Dividend ETF (WDIV) has gained 2.2% over the past month.
So we think fundamentally sound dividend stocks of Telefonaktiebolaget LM Ericsson (publ)(ERIC), Signet Jewelers Limited (SIG), Volkswagen AG (VWAGY), Stellantis N.V. (STLA), and Covestro AG (COVTY) could help generate a steady portfolio income stream amid the market uncertainties. Also, these stocks look undervalued at their current price levels.
Telefonaktiebolaget LM Ericsson (publ)(ERIC)
Headquartered in Stockholm, Sweden, ERIC and its subsidiaries provide communication infrastructure, services, and software solutions to telecom and other sectors. The company operates through four segments: Networks; Digital Services; Managed Services; and Emerging Business and Other.
On May 31, 2022, ERIC and BT, the two major European telecom groups, announced their lucrative collaboration and hefty investment strategies to provide highly efficient private 5G network solutions to U.K. companies. The duo aims to hit the bull’s eye in the emerging 5G business with glitch-free, sustainable, and super speed connections amid rapid digitalization.
ERIC has been paying dividends for 17 consecutive years. Its dividend payouts have grown at a 31.8% CAGR over the past three years. Its four-year average yield is 1.47%, while its current dividend yield is 3.25%.
For the quarter ended March 31, 2022, ERIC’s net sales increased 10.6% year-over-year to SEK55.06 billion ($5.60 billion). Its gross income came in at SEK23.29 billion ($2.39 billion), up 9.4% year-over-year. Also, its cash and cash equivalents were SEK76.86 billion ($7.88 billion), up 89.6% year-over-year.
In terms of forward EV/S, ERIC’s 0.91x is 68.8% lower than the 2.91x industry average. The stock’s 1.07x forward P/S is 63.7% lower than the 2.95x industry average.
ERIC’s revenue is expected to come in at $27.18 billion in 2023, representing a 2.2% year-over-year rise. In addition, the company’s EPS is expected to increase 11.8% to $0.85 in 2023. The stock has declined 24.5% year-to-date to close Friday’s trading session at $8.21.
ERIC’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.
It has an A grade for Value and a B grade for Stability and Quality. ERIC is ranked #3 of 54 stocks in the Technology – Communication/Networking industry. Click here to see the additional POWR Ratings for ERIC (Growth, Momentum, and Sentiment).
Signet Jewelers Limited (SIG)
Based in Hamilton, Bermuda, SIG is a diamond jewelry retailer. It operates through three segments–North America; International; and Other. The company is the world’s largest retailer of diamond jewelry and employs approximately 2,800 stores.
On March 17, 2022, SIG’s CEO, Virginia C. Drosos, said, “We’re confident in the sustainable competitive advantages we’ve built and our ability to leverage our enhanced infrastructure and scale to continue growing ahead of the jewelry industry.”
SIG’s four-year average yield is 3.76%, while its current dividend translates to a 1.28% yield.
SIG’s sales have increased 28.6% year-over-year to $2.81 billion for its fourth fiscal quarter, ended Jan. 29, 2022. The company’s non-GAAP operating income came in…
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