U.S. stocks experienced the type of volatility that
hasn’t been seen for a long time, as the broader market
averages moved into correction territory earlier this
week for the first time in about four years. The selloff
has brought new names onto our radar screen, including
Genuine Parts (GPC:NYSE).
While many names in the model portfolio were hit, we
believe that dividend-paying stocks continue to be the
best bet in a volatile market environment. The cushion of
the payout softens the blow during as stock prices
decline, especially when the yields compare favorably to
Stage Stores (SSI:NYSE) fell 35% over the past two weeks
and recently changed hands at around $10.80, after
management posted lower-than-expected quarterly results
on Aug. 20. The retailer reported earnings per share of
$0.22 in its fiscal second quarter (ended July), as
revenue grew fractionally from the previous year, to
$380.9 million. Same-store sales growth in the period was
Looking forward, the company cut its fiscal year 2016
(ending January) EPS guidance 11%, to $1.05 to $1.15.
Stage Stores is also closing 90 underperforming
and money-losing locations in the coming years, which
represent about 4% of total revenue.
Management increased promotions toward the end of the
quarter, which helped keep inventory at a reasonable
level. We added to our position twice since the earnings
report, as we believe the dividend (with a recent 5.6%
yield) remains secure. As the company gets back on the
right track in the coming quarters, we believe that the
shares can move back up toward the low-teens.
Campbell Soup (CPB:NYSE) is set to announce quarterly
results on the morning of Sept. 3. The company is
expected to earn $0.42 per share in the fiscal fourth
quarter (ended July), down from $0.49 a year earlier, on
$1.69 billion of revenue. Management has met or exceeded
the consensus analyst profit estimate for six straight
Campbell will host a conference call at 8:30 a.m. EDT
that investors can access at 703-639-1316, using the
passcode 1660929. A replay will also be available for two
weeks at 888-266-2081, using the same passcode. Both the
live call and a replay can be accessed at the company’s
campbellsoupcompany.com. On the call, we'll be
listening to how inventory levels are shaping up, ahead
of the fall season.
The shares lost 5% over the past two weeks and recently
traded at about $47.75. We maintain that Campbell is
attractive to hold for the 2.6% dividend yield.
ConocoPhillips (COP:NYSE) fell 10% over the past two
weeks -- along with the underlying price of oil -- and
recently changed hands at around $45.90. That said,
management is cutting costs and remains committed to the
dividend, which recently yielded 6.55%. We maintain the
stock is attractively valued.
Ford Motor (F:NYSE) declined 8% over the past two weeks
and is now trading at roughly $13.50. Even so, we believe
new products will continue to drive growth and that the
stock remains attractive to purchase for the 4.5%
General Electric (GE:NYSE) moved 5% lower over the past
two weeks and recently changed hands at around $24.70.
That said, we like the company's attractive 3.8% dividend
Helmerich & Payne (HP:NYSE) dropped 11% over the past two
weeks -- along with the energy sector -- and recently
traded at about $54.10. That said, the company received
two analyst upgrades on Aug. 26, from Edward Jones and
J.P. Morgan. Management is prudently cutting costs and we
believe the shares remain attractive for the 5.1%
KLA-Tencor (KLAC:Nasdaq) moved 5% lower over the past two
weeks and is now trading at around $49.30. We maintain
our view that the stock is appealing for the 4.3%
Pfizer (PFE:NYSE) declined 6% over the past two weeks and
recently changed hands at around $33.20. That said, we
continue to believe the shares are attractive to purchase
for the 3.4% dividend yield.
Southern Co. (SO:NYSE) fell 5% over the past two weeks
and recently traded at around $44.00. On Aug. 24,
management said that it was buying fellow Atlanta-based
utility, AGL Resources (AGL:NYSE), for $8 billion of
cash. The purchase adds natural gas to the company’s
portfolio and is expected to close in the first half of
Southern expects the purchase will add to earnings in the
first year and boosted its long-term, annual earnings
growth rate to 4% to 5%. We believe that higher earnings
will lead to higher future dividend increases. In the
meantime, the stock is attractive to purchase for the 5%
Altria (MO:NYSE) increased its quarterly dividend on Aug.
21, to $0.565 per share (4.2% yield). Investors at the
close of trading on Sept. 10 will qualify for the payment
on Oct. 10. Management has increased the payout 49 times
in the past 46 years.
Lockheed Martin (LMT:NYSE) investors at the close of
trading on Aug. 27 will qualify for the next quarterly
dividend of $1.50 per share (2.95% yield), to be paid on
Stage Stores investors at the close of trading on Aug. 27
will qualify for the quarterly dividend of $0.15 per
(5.6% yield), to be paid on Sept. 16.
Waste Management (WM:NYSE) announced its latest quarterly
dividend of $0.385 per share (3.1% yield) on Aug. 20.
Investors at the close of trading on Sept. 9 will qualify
for the payment on Sept. 24.
David S. Peltier
The purchase will create the second largest U.S. gas and electric utility.
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