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4 Top Dividend Stocks to Buy for Q4 2021

The market is experiencing raging volatility due to factors like index rebalancing, portfolio adjustments, high inflation, and debt ceiling concerns. With a temporary rise in the debt limit, the possibility of a default still hovers. As experts expect a correction in the near term, dividend stocks such as Coca-Cola Company (KO), CVS Health (CVS), Dow Inc. (DOW), and Sysco Corp (SYY), offering a stable income stream, could be solid bets now.

Driven by investors’ concerns over rising inflation and U.S.-China trade tensions, the dollar eased, and a gauge of global equity markets fell on Monday. "In the past, escalation of U.S.-China trade tensions has sparked risk off among investors," said Marc Chandler, chief market strategist at Bannockburn Global Forex. Moreover, the U.S. Senate temporarily raised the $28.4 trillion debt limit to avoid a potential default. This gives the administration a timeframe of eight weeks to address the issue. This, combined with seasonal factors like index rebalancing and portfolio adjustments, are leading to heightened market volatility.

The market volatility is evident from the recovery of the major indexes yesterday, with Dow gaining almost 340 points while S&P 500 rose 0.8%. Moreover, a recent Bankrate poll revealed that market experts expect a more than 10% correction within the next year, with a third of the analysts expecting a correction anytime over the next six months.

Given the market volatility, shares of fundamentally sound dividend-paying companies The Coca-Cola Company (KO), CVS Health Corporation (CVS), Dow Inc. (DOW), and Sysco Corporation (SYY) could be quality bets to ensure a steady stream of income.

The Coca-Cola Company (KO)

This global non-alcoholic beverage manufacturer needs no introduction. The company sells its beverages under popular brand names such as Coca-Cola, Sprite, Fanta, Dasani, Minute Maid, and POWERADE.

On August 25, KO partnered with micro mobility-focused EV company Lime, whereby a 10-minute free Lime app bike or e-scooter ride will be provided for KO customers who pledge to recycle the product bottles. This demonstrates the company’s commitment to its sustainability goals.

On July 14, KO declared a quarterly dividend of $0.42, which was to be paid on October 1. Its annual dividend of $1.68 yields 3.12% on the current price. KO’s dividend payouts have increased at a CAGR of 2.7% over the past three years. The company has a record of 59 consecutive years of dividend growth.

In the second fiscal quarter that ended July 2, non-GAAP net operating revenues increased 41.1% year-over-year to $10.13 billion, while non-GAAP operating income rose 49% from the prior-year quarter to $3.21 billion. Non-GAAP net income and non-GAAP net income per share stood at $2.93 billion and $0.68, registering a 61.5% and 61.9% year-over-year increase, respectively.

The consensus EPS estimate of $2.26 for the current year (fiscal 2021) indicates a 15.9% year-over-year increase. Likewise, the consensus revenue estimate of $37.95 billion for the ongoing year reflects an improvement of 15% from the prior year. Moreover, KO has an impressive surprise earnings history as it has topped the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 8.7% over the past year and 1.6% over the past five days to close yesterday’s trading session at $53.88.

KO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to a Buy rating in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

KO has a Growth, Stability, and Quality grade of B. In the 38-stock, B-rated Beverages industry, it is ranked #12. Click here to see additional grades for KO (Value, Momentum, and Sentiment).

CVS Health Corporation (CVS)

CVS is a popular health solutions company providing a nationwide pharmacy network in the United States. It also provides healthcare solutions to employers and insurance companies.

On September 29, CVS announced its plans to invest $25 million to build high-quality, affordable housing units in Louisiana. The venture addresses the issue of racial inequality regarding the provision of housing facilities and might generate a new revenue stream for the company.

On September 24, the company made Pfizer-BioNTech COVID-19 booster shots available in CVS pharmacies following the Centers for Disease Control and Prevention (CDC) approval for the eligible population. The need for a booster is increasingly becoming apparent. Thus, this availability might generate substantial returns for CVS.

On October 5, CVS declared a quarterly dividend of $0.50 payable to shareholders on November 1, which cumulates to an annual dividend of $2.00 and yields 2.38% on the current price. The company’s dividend payouts have increased at a CAGR of 4.2% over the past five years.

For the second fiscal quarter that ended June 30, CVS’s total revenues increased 11.1% year-over-year to $72.62 billion. This can be attributed to a 9% year-over-year rise in product revenues to $50.53 billion and an increase in premiums of 12.1% from the prior-year quarter to $18.98 billion. Adjusted EPS came in at $2.42 for the period.

Street EPS estimate for the current quarter (ending December 2021) of $1.58 reflects a 21.5% year-over-year rise, while Street revenue estimate of $71.86 billion for the ongoing quarter indicates an improvement of 3.3% from the prior-year quarter. In addition, CVS has topped the consensus EPS estimate in each of the trailing four quarters, which is impressive.

CVS’s stock has gained 41.7% over the past year to close yesterday’s trading session at $84.20. It also gained 23.3% year-to-date.

It’s no surprise that CVS has an overall grade of A, which translates to a Strong Buy rating in our POWR Ratings system. The stock also has a B grade for Growth, Value, Stability, and Sentiment. It is ranked #1 out of six stocks in the Medical – Drug Stores industry.

To see additional grades for CVS, including Momentum and Quality, click here.

Click here to checkout our Healthcare Sector Report for 2021

Dow Inc. (DOW)

DOW is a material science company that provides packaging solutions in several countries. The company has a diversified portfolio of plastics, industrial intermediates, coatings, and silicones businesses.

On October 6, DOW unveiled its plans to build a net-zero carbon emission complex for ethylene and other derivatives. The project is expected to more than triple its ethylene and polyethylene capacity from its Fort Saskatchewan, Alberta site.

On the same day, the company showed its dedication to reducing plastic waste and lower greenhouse gas emissions by declaring the initial supply of fully circular polymers in 2022. About this development, Diego Donoso, President of DOW Packaging & Specialty Plastics, said, "The market is placing significant value on circularity and Dow is innovating to address the tremendous unmet demand for circular and low carbon polymers."

DOW’s annual dividend of $2.80 yields 4.79% on the current price. On August 12, the company declared a quarterly dividend of $0.70, which was to be paid on September 10.

DOW’s net sales increased 66.2% year-over-year to $13.89 billion in the second fiscal quarter that ended June 30. Operating EBIT went up 4.861.4% from the prior-year quarter to $2.83 billion, while operating EBITDA increased 372% year-over-year to $3.57 billion. Operating EPS stood at $2.72, up substantially from its negative year-ago value.

Analysts expect DOW’s EPS to rise 139.5% year-over-year to $1.94 for the ongoing quarter (ending December 2021). Likewise, the consensus revenue estimate of $13.19 billion for the current quarter indicates a rise of 23.2% from the same period last year. DOW has also beaten consensus EPS estimates in each of the trailing four quarters.

The stock has gained 21.1% over the past year and 5.4% year-to-date to close yesterday’s trading session at $58.51.

DOW’s POWR Ratings reflect this promising outlook. The stock has an overall grade of B, which equates to a Buy rating in our POWR Ratings system. The stock has an A grade for Value, and a B grade for Growth. DOW is ranked #12 out of 93 stocks in the B-rated Chemicals industry.

Click here to see additional grades for Dow, including Momentum, Stability, Sentiment, and Quality.

Sysco Corporation (SYY)

SYY is a food and related products distributor in the United States and globally. The company provides frozen foods, canned foods, fresh foods, dairy products, and beverages to its customers.

On September 23, the company launched eight innovative concepts through its Cutting Edge Solutions platform. These innovations should enable the company to improve its services and attract more customers.

In July, SYY partnered with frozen peel-and-stick patch provider SAVRpak adding the latter’s freshness pack solutions to its Cutting Edge Solutions platform. About the partnership, Judy Sansone, SYY Executive Vice-President and Chief Commercial Officer, said, “Takeout meals will continue to be an important offering for restaurants and this new technology will support our customers’ success by ensuring that meals provided through takeout, delivery or curbside travel well and taste the same as dine-in.”

SYY’s annual dividend of $1.88 yields 2.27% on the current price. On August 27, the company declared a quarterly dividend of $0.47, payable on October 22. SYY’s dividend payouts have increased at a CAGR of 8.5% over the past three years. The company has a record of 24 consecutive years of dividend growth.

In the fourth fiscal quarter that ended July 3, SYY’s non-GAAP sales increased 79.1% year-over-year to $15.88 billion. Non-GAAP gross profit was up 83.1% from the prior-year quarter to $2.87 billion. Non-GAAP net earnings and non-GAAP EPS came in at $366.31 million and $0.71, respectively, registering a substantial increase over their negative year-ago values.

Street expects EPS to improve 143.8% from the prior year to $3.51 in the current year (fiscal 2022), while Street revenue estimate of $63.67 billion for the ongoing year indicates an increase of 24.1% from the previous year. Additionally, SYY has topped the consensus EPS estimates in three out of the trailing four quarters.

SYY’s stock has gained 25% over the past year to close yesterday’s trading session at $82.87. It has also gained 10.7% over the past three months.

The stock has an overall grade of A, which translates to a Strong Buy rating in our proprietary POWR Ratings system. The stock has a Growth, Value, Momentum, and Quality grade of B. In the 84-stock Food Makers industry, it is ranked #6.

In addition to the grades we’ve stated above, one can see SYY’s grades for Stability and Sentiment here.


KO shares fell $0.02 (-0.04%) in after-hours trading Friday. Year-to-date, KO has gained 1.02%, versus a 18.26% rise in the benchmark S&P 500 index during the same period.



About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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