A brutal 2022 has seen several stocks bleed, and as the year comes to a close, investors are expecting several headwinds in the coming months too. Markets have been suffering on Fed’s indication that interest rates will continue to rise through 2023. This has made investors worried about an impending recession.
The Dow, the S&P 500, and the Nasdaq are likely to close the year down 8.6%, 19.2% and 33%, respectively. The multi-year high inflation rate is currently the biggest threat to the U.S. economy. Even though there are recent hints that inflation is slowing down, it is still not under complete control.
Multiple Headwinds Ahead
The Personal Consumption Index (PCE) data for November, the Fed’s favored inflation gauge rose a modest 0.1% in November, less than the consensus estimate. Also, the rate of inflation decreased year over year in November. On a year-over-year basis, inflation increased 4.7% in November after rising 5% in October.
Excluding volatile food and energy prices, the PCE price index rose 0.2% in November, after climbing 0.3% in the month earlier.
This follows the Consumer pricing index (CPI) data for November, which reflected a 7.1% year-over-year rise in inflation, indicating that inflation has slowed substantially from the record highs of 8.2% in September and 8.3% in August. However, it is still at multi-year highs and the Fed has hinted at further rate hikes in 2023.
Market participants also feel that the recent PCE data won’t have much of an impact on the Fed’s plans to continue with its aggressive rate-hike agenda.
Investors are now concerned about how long the Fed will continue with its policy of raising interest rates. Until the Fed indicates a reduction in interest rates, investors believe that trading will remain volatile and stocks will be under pressure.
Investors are worried that high-interest rates could not only slow down the economy but also push it into a recession, as inflation is still well above the Fed’s target of 2%.
Geopolitical concerns have also been impacting markets. The ongoing Russia-Ukraine conflict, which contributed to a wintertime global oil and gas deficit, is causing supply-chain disruptions.
Additionally, the surging COVID-19 cases in China, resulting in the deaths of thousands, and the way Beijing is responding to the situation have also been unsettling markets as investors are concerned about how the lifting of COVID-related restrictions in China will impact global markets and economies.
Given this situation, it makes sense for an astute investor to keep an eye on dividend-paying stocks at the moment. This is because dividend stocks have the potential to endure market volatility and have a track record of success and a solid business plan.
They not only offer a consistent flow of revenues but also minimize the likelihood of frequent price changes. Additionally, during times of market turbulence, dividend-paying stocks have consistently outperformed non-dividend-paying stocks. Four such companies are
Lamb Weston Holdings, Inc.
LW
,
Sandstorm Gold Ltd.
SAND
,
Graco Inc.
GGG
and
The Mosaic Company
MOS
.
Lamb Weston
is an Eagle, ID-based company. This Zacks Rank #3 (Hold) company is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries, and provides a range of appetizers.
On Dec 14, LW declared that its shareholders would receive a dividend of $0.28 a share on Mar 3, 2023. LW has a dividend yield of 1.29%. Over the past five years, LW has increased its dividend five times and its payout ratio at present sits at 37% of earnings.
Check Farmers Lamb Weston’s dividend history here
.
Sandstorm Gold Ltd.
is a gold streaming company engaged in providing upfront financing for gold mining companies. SAND focuses on completing gold purchase agreements with gold mining companies that have advanced-stage development projects or operating mines. Sandstorm Gold Ltd presently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
On Dec 21, 2022, Sandstorm Gold Ltd announced that its shareholders would receive a dividend of $0.02 per share on Jan 21, 2023. SAND has a dividend yield of 1.10%. Over the past five years, Sandstorm Gold Ltd has increased its dividend two times, and its payout ratio is presently 31% of earnings.
Check SAND’s dividend history here
.
Graco
designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. GGG provides valves, pumps, accessories, and meters to dispense and move chemicals, wastewater, oil and natural gas, petroleum, lubricants, food and other fluids.
On Dec 5, 2022, Graco declared that its shareholders would receive a dividend of $0.2350 per share on Feb 1, 2023. It has a dividend yield of 1.4%. Over the past 5 years, GGG has increased its dividend five times, and its payout ratio presently stays at 33% of earnings.
Check GGG’s dividend history here
.
The Mosaic Company
is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. MOS was formed through the combination of the fertilizer businesses of agribusiness giant Cargill Incorporated and IMC Global Inc. The Mosaic Company is the biggest integrated phosphate producer globally and is also among the four largest potash producers in the world.
On Dec 16, 2022, The Mosaic Company declared that its shareholders would receive a dividend of $0.20 per share on Jan 16, 2023. MOS has a dividend yield of 1.32%. Over the past five years, Sandstorm Gold Ltd has increased its dividend five times, and its payout ratio is presently 5% of earnings.
Check MOS’s dividend history here
.
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