While the Federal Reserve expects the increase in inflation to be transitory and is likely to continue maintaining low-interest rates, the resurgence of COVID-19 cases with the rapid spread of the Delta variant, rising geopolitical tensions related to the Afghan government’s collapse, and concerns over the global economic recovery will likely keep the stock market highly volatile in the near term. While the long-term impact of geopolitical tensions on the U.S. stock market is still uncertain, the major benchmark indexes sagged this morning.
Therefore, we think it could be wise to secure some income by betting on fundamentally sound dividend-paying stocks, particularly with Treasury Yields declining. Investors’ interest in high-dividend-yield stocks is evident in the SPDR Portfolio S&P 500 High Dividend ETF’s (SPYD) 23.1% returns year-to-date.
Dividends paid by GlaxoSmithKline plc (GSK), Vector Group Ltd. (VGR), Star Group, L.P. (SGU), and Ennis, Inc. (EBF) translate to high yields at their current price levels. Given their impressive payout histories and fundamentals, it could be wise to bet on these stocks now.
GlaxoSmithKline plc (GSK)
Based in the U.K., GSK discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company focuses its research on treating respiratory diseases, HIV/infectious diseases, vaccines, immuno-inflammation, oncology, and rare diseases.
On August 16, 2021, GSK and biopharmaceutical company CureVac N.V. (CVAC) published preclinical data showing the immune responses and protective efficacy of CVAC’s first and second-generation vaccine candidates, CVnCoV and CV2CoV, respectively, against SARS-CoV-2 challenge in non-human primates. Better activation of innate and adaptive immune responses was achieved with CV2CoV across all selected variants, showing faster response onset, higher titers of antibodies, and stronger memory B and T cell activation than CVnCoV. These clinical results are likely to contribute significantly to the development of a vaccine for new variants.
GSK’s revenues for its fiscal second quarter, ended June 30, 2021, increased 14.7% year-over-year to £8.09 billion ($11.28 billion). The company’s adjusted gross profit came in at £5.74 billion ($7.97 billion), up 6.9% from the prior-year period. Its adjusted operating profit has been reported at £2.16 billion ($2.99 billion) for the quarter, representing a 23.4% rise from the prior-year period. GSK’s adjusted net profit increased 32.5% year-over-year to £1.41 billion ($2.25 billion). Its adjusted EPS increased 46.4% year-over-year to 28.1 pence. The company had £3.50 billion ($4.86 billion) in cash and cash equivalents as of June 30, 2021.
GSK surpassed consensus EPS estimates in each of the trailing four quarters. The $12.10 billion consensus revenue estimate for the current quarter, ending September 30, 2021, represents a 7.8% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 4.4% rate per annum over the next five years.
GSK distributes $2.17 in dividends annually, which translates to a 5.18% dividend yield. The company’s dividend has grown at a 5.4% rate over the past four years. The stock has gained 17.3% over the past six months and 3.6% over the past month. It closed Friday’s trading session at $41.97.
GSK’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth, and a B grade for Value, Stability, and Sentiment. Click here to see the additional ratings for GSK’s Quality and Momentum. GSK is ranked #3 of 216 stocks in the Medical – Pharmaceuticals industry.
Click here to checkout our Healthcare Sector Report for 2021
Vector Group Ltd. (VGR)
VGR in Miami, Fla., manufactures and sells cigarettes through its Liggett and Vector Tobacco subsidiaries. It conducts its real estate business through its New Valley LLC subsidiary, which seeks to acquire or invest in additional real estate properties or projects. It markets and sells its cigarettes to wholesalers and distributors of tobacco and convenience products, as well as grocery, drug, and convenience store chains.
On April 15, 2021, New Valley Ventures, VGR’s investment vehicle seeking opportunities in next-generation technologies in the property technology (PropTech) space, invested in another PropTech company, Humming Homes, a New York-based tech-enabled home management service. Amid a strong housing market and a surge in home buying, this investment enables New Valley Ventures to offer its agents new technology to help ease buyers into homeownership.
For its fiscal second quarter, ended June 30, 2021, VGR’s total revenues increased 63.7% year-over-year to $729.53 million. The company’s adjusted operating income came in at $137.08 million, representing a 96.4% year-over-year improvement. VGR’s adjusted net income was $96.49 million, up 236.7% from the prior-year period. Its adjusted EPS increased 231.6% year-over-year to $0.63. As of June 30, 2021, the company had $490 million in cash and cash equivalents. Analysts expect VGR’s EPS to improve 48% in the current quarter, ending September 30, 2021, to $0.37. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $651.80 million for the current quarter, representing a 19% rise year-over-year. Its EPS is expected to grow at a 13.1% rate per annum over the next five years.
VGR distributes an $0.80 per share dividend annually, which translates to a 5.5% yield. The company’s dividend has grown at an 11.1% rate over the past four years. The stock has gained 29.3% over the past nine months and 7.1% over the past month. It ended Friday’s trading session at $14.55.
VGR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Momentum, and a B grade for Growth, Value, and Quality. We also have graded VGR for Sentiment and Stability. Click here to access all VGR’s ratings. Of the 11 stocks in the A-rated Tobacco industry, VGR is ranked #1.
Star Group, L.P. (SGU)
SGU is a service energy provider to residential and commercial customers. The company sells diesel, gasoline, and home heating oil on a delivery-only basis and plumbing services. It also installs, maintains, and repairs heating and air conditioning equipment. SGU is based in Stamford, Conn.
SGU’s revenue for its fiscal third quarter, ended June 30, 2021, increased 21.9% year-over-year to $283.10 million. As of June 30, 2021, the company had $193.50 million in cash and cash equivalents.
SGU pays $0.57 in dividends annually, which translates to a dividend yield of 5.4%. The company’s dividend has grown at a 5.1% rate over the past four years. SGU has gained 12.1% year-to-date and 8% over the past six months. It closed Friday’s trading session at $10.55.
It’s no surprise that SGU has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Quality, and a B grade for Value, Stability, and Sentiment. Click here to see the additional ratings for SGU’s Growth and Momentum. SGU is ranked #1 of 39 stocks in the B-rated MLPs – Oil & Gas industry.
Note that SGU is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Ennis, Inc. (EBF)
Midlothian, Tex.-based EBF produces and sells printed business products, business forms, envelopes, presentation products, and other products to distributors primarily through independent dealers. It also manufactures and distributes T-Shirts and other active-wear apparel.
On June 2, 2021, EBF acquired AmeriPrint Corporation, a trade printer specializing in custom-printed documents, barcoding, integrated products, and business forms. AmeriPrint brings added capabilities and expertise to EBF’s expanding product offering, including barcoding and variable imaging, and will add depth to its products and services at its Integrated Print Group in Illinois.
EBF’s net sales for its fiscal third quarter, ended May 31, 2021, increased 8.9% year-over-year to $96.93 million. The company’s gross profit came in at $29.19 million, up 22.1% from the prior-year period. Its income from operations has been reported at $10.55 million for the quarter, representing a 78.9% year-over-year improvement. While its net earnings increased 74.5% year-over-year to $7.30 million, its EPS increased 75% year-over-year to $0.28.
A $0.29 consensus EPS estimate for the current quarter, ending August 30, 2021, represents a 16% improvement from the prior-year period. EBF has surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect EBF’s revenue to be $98.70 million for the current quarter, representing a 14% rise from the prior-year period. Analysts expect the stock’s EPS to grow at a 5% rate per annum over the next five years.
EBF distributes $1 in dividends annually, which translates to a 4.93% dividend yield. The company’s dividend has grown at a 4.7% rate over the past four years. EBF has gained 22.7% over the past nine months and 3.5% over the past six months. It closed Friday’s trading session at $20.30.
EBF’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system.
EBF has an A grade for Quality, and a B grade for Stability, Sentiment, and Momentum. In addition to the POWR Ratings grades we’ve just highlighted, one can see EBF’s ratings for Growth and Value here. Of the 73 stocks in the Consumer Goods industry, EBF is ranked #2.
GSK shares were trading at $42.07 per share on Monday afternoon, up $0.10 (+0.24%). Year-to-date, GSK has gained 17.92%, versus a 19.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…
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