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The appeal of dividend stocks among the investing community has been consistent, and with good reason. Generally, dividend-paying companies have a consistent track record of growing profitability, steady management, and a strong position in the market. Companies with a strong dividend history have also usually navigated multiple business cycles over the years, both good and bad.
Notably, the case for investing in dividend stocks becomes even stronger with the Federal Reserve now opting for a higher-than-standard 50-basis point rate cut, rather than the usual 25-bps trim. This bodes well for dividend stocks, which become more attractive as yield-seeking investors look outside the fixed-income market for returns. To that end, here are three high-quality stocks that have not only raised dividends at a healthy pace, but look set for continued growth as interest rates start to drop.
#1. Domino's Pizza
Founded by the Monaghan Brothers in 1960, Domino's Pizza is one of the foremost names when it comes to serving pizzas globally. One of the largest pizza chains in the world, Domino's operates in close to 21,000 locations across 90+ countries. The company specializes in delivering and carrying out pizza, along with other items like pasta, sandwiches, chicken, and desserts. The company currently commands a market cap of $14.3 billion.
DPZ stock hasn't delivered much movement in 2024 so far, falling marginally YTD. The company offers a dividend yield of 1.46%, which it has grown at a rate of 18% over the past five years. Additionally, Domino's has been increasing its dividends consistently for the past 12 years, and with a sustainable payout ratio of 33.4%, there's scope for further growth.
When it comes to growth in revenues and EPS, the company has had a strong showing, as well. Over the past 10 years, while the company's revenues have clocked a CAGR of 9.42%, its EPS has compounded at a rate of 14.02%.
The results for the latest quarter were mixed, with Domino's reporting a beat on earnings, but a miss on revenue. Sales rose by 5.2% from the previous year to $4.4 billion in the second quarter, aided by same-store growth in the U.S. and International segments. EPS improved by an impressive 30.8% in the same period to $4.03, easily outpacing the consensus estimate of $3.68. Notably, this marked the seventh consecutive quarterly earnings beat from DPZ.
Net cash from operating activities for the six months ended June 30 was $274.2 million, up 13.2% from the prior year. Liquidity-wise, the company remained on solid ground, ending the quarter with a cash balance of $283.7 million. This was much higher than its current debt of about $5 million.
Domino's secret sauce lies in its capital-light asset model and harnessing the power of technology. This approach provides the company with strong competitive advantages, including economies of scale, brand strength, and a vast global franchise network.
Additionally, Domino's has been an industry innovator with its "fortressing" strategy, which reduces delivery distances by opening new stores in existing markets, placing them closer to customers. This has led to faster delivery times and lower costs per delivery. The Domino's Rewards loyalty program has also seen strong growth, with customer orders including loyalty redemptions doubling in the first half of 2024 compared to 2023. This has contributed to a 4.8% increase in same-store sales in the U.S.
With its sticky customer base, supreme brand recognition, and robust balance sheet, analysts are bullish about DPZ stock, with an overall rating of “Moderate Buy.” Out of 29 analysts covering the stock, 16 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 10 have a “Hold” rating, and 1 has a “Strong Sell” rating.
DPZ's average 12-month price target of $496.31 denotes an upside potential of about 21.3% from current levels.
#2. UnitedHealth Group
Founded in 1977, Minnesota-based UnitedHealth Group is a diversified healthcare company that provides a range of services and products through its two primary business platforms: UnitedHealthcare and Optum. One of the largest health insurance companies in the world by revenue, UnitedHealth currently commands a market cap of $531.9 billion.
On a YTD basis, UNH stock is up 10.3%. The stock offers a dividend yield of 1.45%, which it has grown at a pace of nearly 15% over the past 5 years. UNH has raised dividends consistently for the past 15 years. Plus, with its conservative payout ratio of 29.3%, there's room for continued dividend growth.
Over the last 10 years, UnitedHealth has grown its revenue and earning at CAGRs of 11.83% and 10.48%, respectively.
In the most recent quarter, UNH beat estimates on both revenue and earnings. Revenues for the second quarter came in at $98.9 billion, up 6.5% from the previous year, with EPS rising by 10.7% over the same period to $6.80, beating the consensus estimate of $6.65. This was UNH's 16th consecutive quarterly earnings beat.
The company's liquidity position also remained solid, as it exited the quarter with a significant cash balance of $31.3 billion - much higher than its short-term debt levels of $11.4 billion.
As a result of its balance sheet strength, UnitedHealth has been able to carry out some material acquisitions, which has helped it to enhance its competitive advantage. For instance, its 2022 acquisition of Change Healthcare has allowed it to enhance its Optum Insight business with substantial data assets and an expanded customer base. Or its 2023 buyout of LHC group, one of the nation’s largest home health providers, for $5.4 billion enables UnitedHealth’s Optum business to expand their high-quality home and community-based care.
Despite concerns about a recent cyberattack, UnitedHealth's position as the largest health insurer will enable it to capitalize on rising healthcare costs. The Centers for Medicare and Medicaid Services (CMS) forecasts national health spending to grow by 5.1% annually from 2021 to 2030, reaching $6.8 trillion by 2030.
UnitedHealth's payer-agnostic strategy ensures that its divisions and subdivisions operate independently, avoiding conflicts of interest and building trust among customers.
With its diversified divisions across key healthcare services segments, UnitedHealth is rated as a “Strong Buy” among analysts, with a mean target price of $626.14. This reflects an upside potential of roughly 7.8% from current levels. Out of 23 analysts covering the stock, 21 have a “Strong Buy” rating, and 2 have a “Moderate Buy” rating.
#3. Keurig Dr Pepper
We conclude our list of top dividend growers to invest in this September with Keurig Dr Pepper . Formed in 2018 through the merger of Keurig Green Mountain and Dr Pepper Snapple Group, the company is in the production and distribution of a wide range of beverages, including coffee, tea, soda, and flavored water. Its market cap has soared to a sizeable $50.8 billion.
KDP stock is up 12.6% on a YTD basis, and it also offers a dividend yield of 2.45%. The dividend has grown at a 7.5% rate over the past five years, with a very manageable payout ratio of 46.2%.
In the latest quarter, Dr Pepper reported net sales of $3.92 billion, up 3.4% from the previous year, while EPS rose 7.1% to $0.45. While Q2 revenues surpassed consensus estimates, EPS arrived right in line with expectations.
Over the past five years, Dr Pepper's revenue and earnings have expanded at CAGRs of 6.76% and 17.85%, respectively.
The company exited Q2 with a cash balance of $438 million, up 64% from the start of the year, though much lower than its short-term debt levels of $2.4 billion. For the first six months of 2024, KDP reported net cash flow from operating activities of $742 million, up from $452 million in the year-ago period.
KDP boasts a robust portfolio of well-recognized brands, paving a smoother path toward growth. Its popular offerings include Dr Pepper, 7 Up, Schweppes, Sunkist, and Lavazza, among others. The company's numerous strategic partnerships further strengthen its position. Notable examples include the C4 partnership, which has demonstrated strong growth with C4 retail sales increasing 30% year-over-year in Q2 2024, despite a slowdown in the energy drinks segment. Other successful collaborations involve CORE Hydration and Mott's back-to-school programming.
Broader economic tailwinds, such as softer inflation readings and commodity price deflation, also favor the company's outlook. Combined with management's focus on driving improvements in supply chain optimization, digital capabilities, and shared services, KDP appears poised for success. These factors collectively position the company as a potential winner in the competitive beverage market.
Analysts like KDP's prospects, with an average rating of “Moderate Buy.” Out of 16 analysts covering the stock, 7 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 8 have a “Hold” rating. The stock trades at a premium to its mean price target of $36.82, but has room to run 9.3% to its Street-high target price of $41.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Cracker Barrel Old Country Store, Inc. CBRL is scheduled to report fourth-quarter fiscal 2024 results on Sept. 19. In the last reported quarter, CBRL registered an earnings surprise of 57.1%.
Trend in Estimate Revision
The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share is pegged at $1.17, which indicates a deterioration of 34.6% from $1.79 reported in the year-ago quarter.
For revenues, the consensus mark is pegged at $898.8 million, which implies an increase of 7.4% from the year-ago quarter’s reported figure.
Let’s check out the factors that might have influenced CBRL’s performance in the quarter to be reported.
Factors at Play for CBRL
Cracker Barrel's fiscal fourth-quarter top line is likely to have been aided by menu innovation, higher menu pricing, expansion and other sales-building efforts. Given the growing demand for its breakfast category, including Homestyle Chicken, French Toast, Barrel Bites and beverages, Cracker Barrel introduced its $5 take-home meals at the beginning of fiscal 2024, which is expected to have aided the company’s top line.
The company is also benefiting from growth in off-premise sales. It continues to focus on off-premise initiatives, such as curbside delivery, third-party delivery and family meal baskets. These efforts are likely to have aided the off-premise sales.
Our model predicts Restaurant and Retail revenues to be $715.9 million and $168.2 million, respectively, up 7.9% and 6.9% year over year. However, dismal traffic and same-store sales are expected to have negatively impacted the company’s results. Our model predicts retail same-store sales to decline 0.5% year over year. CBRL’s retail business faces challenges stemming from broader industry pressures, particularly in discretionary categories.
Strategic investments in advertising and labor are likely to have increased costs and exerted margin pressure in the to-be-reported quarter. For fourth-quarter fiscal 2024, our model predicts labor and other related expenses to rise 9% year over year to $332.6 million. We expect store-operating expenses to increase 8.4% year over year to $821.6 million. Our model predicts adjusted-operating income to decline 30.7% year over year to $27.6 million.
Cracker Barrel Old Country Store, Inc. Price and EPS Surprise
Cracker Barrel Old Country Store, Inc. price-eps-surprise | Cracker Barrel Old Country Store, Inc. Quote
What Our Model Says
Our proven model predicts an earnings beat for Cracker Barrel this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.
Earnings ESP: Cracker Barrel currently has an Earnings ESP of +2.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks Poised to Beat on Earnings
Here are some other stocks worth considering from the Zacks Retail-Wholesale sector, as our model shows that these, too, have the right combination of elements to beat on earnings this reporting cycle.
Domino's Pizza, Inc. DPZ currently has an Earnings ESP of +3.94% and a Zacks Rank #3. Shares of Domino's have risen 6.4% in the past year. DPZ’s earnings beat the consensus mark in each of the trailing four quarters, delivering an average surprise of 11.2%.
Papa John's International, Inc. PZZA has an Earnings ESP of +2.11% and a Zacks Rank #3 at present. Shares of Papa John's have lost 32.9% in the past year. PZZA’s earnings beat the consensus mark in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 13.6%.
Starbucks Corporation SBUX currently has an Earnings ESP of +2.61% and a Zacks Rank #3. Shares of Starbucks have lost 0.5% in the past year. SBUX’s earnings beat the consensus mark in two of the trailing four quarters and missed twice, delivering an average surprise of 1.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Zacks Investment Research
Darden Restaurants, Inc. DRI is scheduled to report first-quarter fiscal 2025 results on Sept. 19, before the opening bell. In the last reported quarter, the company delivered an earnings surprise of 1.15%.
How Are Estimates Placed?
The Zacks Consensus Estimate for the fiscal first-quarter earnings per share (EPS) is pegged at $1.82, indicating growth of 2.3% from $1.78 reported in the year-ago quarter.
For revenues, the consensus mark is pegged at $2.8 billion, suggesting a 2.5% increase from the year-ago quarter’s figure.
Darden Restaurants, Inc. Price and EPS Surprise
Darden Restaurants, Inc. price-eps-surprise | Darden Restaurants, Inc. Quote
Factors at Play
Darden’s fiscal first-quarter performance is likely to have benefited from new restaurant openings, the integration of Ruth's Chris Steak House and menu innovation. By focusing on core menu items and introducing new culinary options, the company has enhanced its appeal to a broad customer base. This focus, combined with more efficient kitchen operations, is likely to have contributed to higher guest satisfaction and sustained sales growth in the first quarter fiscal 2025.
In fiscal 2024, the company opened 53 new restaurants across various states and completed the integration of Ruth’s Chris Steak House ahead of schedule. The acquisition has already delivered accretive benefits, contributing 10 cents to EPS in the fourth quarter of fiscal 2024. With the fine dining brand's strong market position, the momentum is expected to continue into the first quarter of fiscal 2025, providing a boost to sales and profitability.
Strong contributions from core casual dining brands, including Olive Garden and LongHorn Steakhouse, are likely to have aided DRI’s top line in the fiscal first quarter. Our model predicts revenues from Olive Garden and LongHorn Steakhouse to rise 2.3% and 3.7% year over year to $1.3 billion and $0.7 billion, respectively.
However, the weakening consumer backdrop, particularly among households below the median income, is likely to have negatively impacted the company’s performance in the fiscal first quarter. Darden is likely to have faced softer demand. The company noted that it remains cautious with pricing to stay competitive, which could put pressure on its same-restaurant sales growth compared to prior quarters.
Elevated expenses concerning food, beverage and labor costs are likely to have dented margins in the to-be-reported quarter. Our model predicts fiscal first-quarter food and beverage, and labor costs to rise 3.5% and 3.9% year over year to $881 million and $909 million, respectively.
What Our Model Says
Our proven model predicts an earnings beat for Darden this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Darden has an Earnings ESP of +0.36%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks Poised to Beat on Earnings
Here are some other stocks worth considering from the Zacks Retail-Wholesale sector, as our model shows that these have the right combination of elements to beat on earnings this season:
Domino's Pizza, Inc. DPZ currently has an Earnings ESP of +3.94% and a Zacks Rank #3.
Shares of Domino's have increased 6.4% in the past year. DPZ’s earnings beat the consensus mark in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 11.2%, on average.
Papa John's International, Inc. PZZA has an Earnings ESP of +2.11% and a Zacks Rank #3.
Shares of Papa John's have declined 32.9% in the past year. PZZA’s earnings beat the consensus mark in three of the trailing four quarters and missed on one occasion. The company has a trailing four-quarter earnings surprise of 13.6%, on average.
Starbucks Corporation SBUX currently has an Earnings ESP of +2.61% and a Zacks Rank #3.
Shares of Starbucks have declined 0.5% in the past year. SBUX’s earnings beat the consensus mark in two of the trailing four quarters and missed twice. The company has a trailing four-quarter negative earnings surprise of 1.7%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Zacks Investment Research
General Mills, Inc. GIS is likely to register a top and bottom-line decline when it reports first-quarter fiscal 2025 earnings on Sep. 18. The Zacks Consensus Estimate for revenues is pegged at $4.78 billion, which suggests a decrease of 2.5% from the prior-year quarter’s reported figure.
The consensus mark for quarterly earnings has remained unchanged in the past 30 days at $1.05 per share. This indicates a decline of 3.7% from the year-ago quarter’s reported figure. GIS has a trailing four-quarter earnings surprise of nearly 6%, on average.
General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
Things to Note About GIS’ Upcoming Release
General Mills has been operating amid a tough operating landscape. On its last earnings call, the company anticipated the operating environment to continue evolving in fiscal 2025. It expected that the macroeconomic uncertainty will lead consumers to continue seeking value, influencing both the products they purchase and the channels they shop through.
General Mills faces ongoing margin pressure from rising production costs. On its fourth-quarter earnings call, General Mills stated that the rate of inflation for goods and services in the United States and many other countries remains above historical levels, even though it has moderated from recent highs. Inflation is expected to impact the company's input costs in fiscal 2025. The company expects input cost inflation to be 3-4% of the cost of goods sold in fiscal 2025, with labor being the primary driver affecting sourcing, manufacturing and logistics expenses.
On its last earnings call, General Mills stated it expects first-quarter results to fall short of the full-year growth expectations. This is likely to stem from a considerable increase in brand-building investment, as well as tough comparisons with strong organic net sales growth and adjusted gross margin performance in the year-ago period. Our model suggests a 10-bps contraction in the adjusted gross margin to 35.3% for the first quarter. We expect the adjusted operating margin to shrink 70 bps to 17.6% in the first quarter.
However, General Mills has been benefiting from the strength of its brands and a focus on its Accelerate strategy. The strategy is based on four pillars that include building brands, undertaking constant innovation, leveraging scale and standing for good. GIS continues to focus on core markets, global platforms and local gem brands with growth prospects. The emphasis on innovation and brand marketing has been helping the company strengthen its product portfolio. General Mills has also been benefiting from its measures to boost efficiency, including its Holistic Margin Management strategy.
What the Zacks Model Unveils for GIS
Our proven model predicts an earnings beat for General Mills this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
General Mills carries a Zacks Rank #3 and has an Earnings ESP of +1.92%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are some other companies worth considering, as our model shows that these also have the correct combination to beat on earnings this time.
Darden Restaurants, Inc. DRI has an Earnings ESP of +0.04% and a Zacks Rank of 3 at present. DRI is expected to register top and bottom-line growth in its upcoming release. The consensus estimate for quarterly revenues is pegged at $2.8 billion, which calls for 2.6% growth from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Darden Restaurants’ quarterly earnings has declined by a penny in the past seven days to $1.83, which indicates a 2.8% rise from the figure reported in the year-ago quarter. DRI delivered a trailing four-quarter average earnings surprise of 2.8%.
Costco Wholesale Corporation COST currently has an Earnings ESP of +0.62% and a Zacks Rank of 3. The company is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COST’s quarterly revenues is pegged at $79.82 billion, which suggests growth of 1.1% from the year-ago quarter’s reported figure.
The consensus estimate for Costco’s earnings has gone up by a penny in the past seven days to $5.04. The consensus mark for earnings indicates growth of 3.7% from the year-ago quarter’s reported figure. COST delivered an earnings beat of 2.3%, on average, in the trailing four quarters.
Domino's Pizza, Inc. DPZ currently has an Earnings ESP of +3.94% and a Zacks Rank of 3. The company is likely to register top-line growth in its upcoming earnings release. The consensus mark for DPZ’s quarterly revenues is pegged at $1.1 billion, which indicates a 7.4% rise from the figure reported in the prior-year quarter.
The consensus mark for Domino's Pizza’s quarterly earnings has moved up by 2 cents in the past 30 days to $3.66, which implies a decline of 12.4% from the year-ago quarter’s actual. DPZ delivered an earnings beat of 11.2%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Zacks Investment Research
Top Wall Street analysts changed their outlook on these top names. For a complete view of all analyst rating changes, including upgrades and downgrades, please see our analyst ratings page.
Considering buying GOOGL stock? Here’s what analysts think:
Read More:
Latest Ratings for GOOGL
Date | Firm | Action | From | To |
---|---|---|---|---|
Feb 2022 | MKM Partners | Maintains | Buy | |
Feb 2022 | Mizuho | Maintains | Buy | |
Feb 2022 | Piper Sandler | Maintains | Overweight |
View More Analyst Ratings for GOOGL
View the Latest Analyst Ratings
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Last Friday, all of the three most widely followed indexes closed out a winning week. The tech-focused Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average advanced 6%, 4% and 2.6%, respectively. These are approximately two-week highs for all three benchmark indexes.
With both consumer and producer-side inflation coming in line with expectations, investor mood was upbeat about the Fed bringing down rates more than expected earlier. The labor market was modestly up. Backed up by a positive consumer sentiment report released late in the week, currently there is a raging debate on the extent of the rate cut that would be announced by the Fed.
Per CME’s FedWatch tool, while a 25 bps rate cut still edges ahead with a 51% probability, a 50 bps cut has soared to 49%. Trade throughout the week will be dominated by the Fed’s signals and how the market interprets them.
Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.
As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.
Here are some of our key achievements:
IAMGOLD and Sierra Surge Following Zacks Rank Upgrade
Shares of IAMGOLD Corporation IAG have surged 31.2% (versus the S&P 500’s 0.9% increase) since it was upgraded to a Zacks Rank #1 (Strong Buy) on July 18.
Another stock, Sierra Bancorp BSRR, was also upgraded to a Zacks Rank #1 on July 18 and has returned 7.9% since then.
Zacks Rank, our short-term rating system, has earnings estimate revisions at its core. Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
A hypothetical portfolio of Zacks Rank #1 (Strong Buy) stocks returned +20.63% in the year-to-date period through April 1st, 2024, vs. +11.3% for the S&P 500 index and +7.7% for the equal-weight S&P 500 index. This hypothetical portfolio returned +20.63% in 2023 vs. +24.83% for the S&P 500 index and +15% for the equal-weight S&P 500 index. The portfolio of Zacks Rank #1 stocks is an equal-weight portfolio, while the S&P 500 index is a market-cap-weighted index that has been notably distorted by the concentrated performance of mega-cap stocks since October 2022.
The Zacks Model Portfolio - consisting of Zacks Rank #1 stocks – has outperformed the S&P index by more than 16 percentage points since 1988 (Through April 1st, 2024, the Zacks # 1 Rank stocks generated an annualized return of +27.6% since 1988 vs. +11.1% for the S&P 500 index).You can see the complete list of today’s Zacks Rank #1 stocks here >>>
Check IAMGOLD’ historical EPS and Sales here>>>
Check Sierra’s historical EPS and Sales here>>>
Zacks Recommendation Upgrades Financial Institutions and First United Higher
Shares of Financial Institutions, Inc. FISI and First United Corporation FUNC have advanced 8.9% (versus the S&P 500’s 3.8% rise) and 4.7% (versus the S&P 500’s 4.4% rise), since their Zacks Recommendation was upgraded to Outperform on July 25 and July 26, respectively.
While the Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon, the Zacks Recommendation aims to predict performance over the next 6 to 12 months. However, just like the Zacks Rank, the foundation for the Zacks Recommendation is trends in earnings estimate revisions.
The Zacks Recommendation classifies stocks into three groups — Outperform, Neutral and Underperform. While these recommendations are determined quantitatively, our analysts have the flexibility to override them for the 1100+ stocks they closely follow based on their better judgment of factors such as valuation, industry conditions and management effectiveness than the quantitative model.
To access our research reports with Zacks Recommendations for the 1100+ stocks we cover, click here>>>
Zacks Focus List Stocks Palantir, Virtu Shoot Up
Shares of Palantir Technologies Inc. PLTR, which belongs to the Zacks Focus List, have gained 49.3% over the past 12 weeks. The stock was added to the Focus List on March 26, 2024. Another Focus-List holding, Virtu Financial, Inc. VIRT, which was added to the portfolio on July 31, 2023, has returned 39.2% over the past 12 weeks. The S&P 500 has advanced 3.1% over this period.
The Focus List portfolio returned +10.23% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight S&P 500 index.
The 50-stock Zacks Focus List model portfolio returned +31.44% in 2023 vs. +26.28% for the S&P 500 index and +13.61% for the equal-weight S&P 500 index. In 2022, the portfolio produced -15.2% vs. the S&P 500 index’s -17.96%.
Since 2004, the Focus List portfolio has produced an annualized return of +11.91% (through March 31st, 2024). This compares to a +10.25% annualized return for the S&P 500 index in the same time period.
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Zacks ECAP Stocks Fair Isaac and UnitedHealth Make Significant Gains
Fair Isaac Corporation FICO, a component of our Earnings Certain Admiral Portfolio (ECAP), has jumped 30.1% over the past 12 weeks. UnitedHealth Group Incorporated UNH has followed Fair Isaac with 23.2% returns.
The Zacks Earnings Certain Admiral Portfolio (ECAP), which consists of 30 concentrated, ultra-defensive, long-term Buy-and-Hold stocks, returned +9.08% in the year-to-date period (through March 31st, 2024) vs. +10.42%. In 2023, the portfolio returned +12.17% vs. +26.28% for the S&P 500 index. The portfolio returned -4.7% in 2022 vs. the S&P 500 index’s -17.96%.
With little to no turnover and annual rebalance periodicity, the ECAP seeks to minimize capital loss by holding shares of companies whose earnings streams exhibit a proven 20+ year track record of surviving recessionary periods with minimal impact on aggregate earnings growth relative to the overall S&P 500.
The ECAP and many other model portfolios are available as part of Zacks Advisor Tools, a cloud-based solution to access Zacks award-winning stock, mutual fund and ETF research. Click here to schedule a demo.
Zacks ECDP Stocks 3M and Starbucks Outshine Peers
3M Company MMM, which is part of our Earnings Certain Dividend Portfolio (ECDP), has returned 30.1% over the past 12 weeks. Another ECDP stock, Starbucks Corporation SBUX, has climbed 23.4% over the same time frame. Of course, the inclination of investors toward quality dividend stocks to secure an income stream amid heightened market volatility contributed to this performance.
Check 3M’s dividend history here>>>
Check Starbucks’ dividend history here>>>
With an extremely low Beta and a history of minimum earnings variability over the last 20+ years, this 25-stock portfolio helps significantly mitigate risk.
The Zacks Earnings Certain Dividend Portfolio (ECDP) returned +4.47% in the year-to-date period (through March 31st, 2024) vs. +10.42% for the S&P 500 index (IVV) and +6.9% for the Dividend Aristocrats ETF (NOBL).
The portfolio returned -0.9% in 2023 vs. +26.28% for the S&P 500 index and +8.11% for NOBL. The portfolio returned -2.3% in 2022 vs. -17.96% for the S&P 500 index and -8.34% for NOBL.
Click here to access this portfolio on Zacks Advisor Tools.
Zacks Top 10 Stocks — Badger Meter Delivers Solid Returns
Badger Meter, Inc. BMI, from the Zacks Top 10 Stocks for 2024, has jumped 35.4% year to date compared with an 18.3% increase for the S&P 500 Index.
The Top 10 portfolio returned +19.56% in 2024 Q1 vs. +10.56% for the S&P 500 index and +7.9% for the equal-weight version of the index.
The Top 10 portfolio returned +25.15% in 2023 vs. +26.28% for the S&P 500 index. Since 2012, the Top 10 portfolio has produced a cumulative return of +1,060.9% through the end of 2023 vs. +360.1% for the S&P 500 index.
Since 2012, the Zacks Top 10 portfolio has produced an annualized return of +25.02% through the end of 2024 Q1 vs. +14.1% for the S&P 500 index and +12.7% for the equal-weight version of the index. The portfolio has produced a cumulative return of +1,442.3% vs. +403.03% for the S&P 500 index and +331.29% for the equal-weight index.
Zacks Investment Research
Keurig Dr Pepper Inc. KDP announced a raise in its quarterly dividend to 92 cents per share from the previous payout of 86 cents per share. Scheduled to be paid on Oct 11, 2024, to shareholders of record as of Sept. 27, 2024, this 7% hike underscores KDP’s commitment to boost the value of its shareholders via regular dividend payments and share repurchases.
The new payout makes Keurig Dr Pepper’s annualized dividend rate $3.68 per share, translating to an attractive yield of about 10% based on the stock price as of Thursday. The company had repurchased shares for $1.1 billion in first-half 2024. Such shareholder-friendly actions are required to attract long-term investors seeking consistent returns.
Dividend hikes and constant share repurchases not only maximize shareholders’ returns but also strengthen investors’ confidence in the company's financial health and stability. As of June 30, 2024, Keurig Dr Pepper’s cash and cash equivalents of $438 million, up 57.6% on a year-over-year basis. Net cash provided by operating activities totaled $742 million in first-half 2024, with a free cash flow of $470 million.
How is KDP Performing Now?
Continued brand strength and pricing actions have been aiding Keurig Dr Pepper’s performance for a while now. KDP’s consumer-centric innovation model, portfolio expansion into high-growth categories and robust route-to-market capabilities are encouraging. It has been experiencing strong market share gains across categories for a while now. Momentum in the Refreshment Beverages segment acts as a tailwind.
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The company announced a planned transaction with Kalil Bottling Company, an important step toward a route-to-market advantage. This transaction looks forward to granting the company complete control of the brands’ distribution in Arizona. This will reinforce its unique national direct-store-delivery capabilities and offer opportunities for advanced scale and brand building in a fast-growing region for beverages.
However, Keurig Dr Pepper is not immune to the cost pressures in transportation, warehousing, and labor and inflationary headwinds. A tough operating landscape with resilient demand is also a concern. KDP has been witnessing sluggishness in its coffee segment for a while now.
Despite such headwinds, shares of the energy drinks and alternative beverages marketer have appreciated 31% in the past six months compared with the industry’s 10.6% rise. The company has been working to maneuver the aforesaid challenges. The above-discussed strengths, along with the recent dividend hike, will continue boosting the Zacks Rank #3 (Hold) stock’s performance ahead.
Stocks to Consider
The Chef's Warehouse CHEF, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for CHEF’s current financial-year sales and earnings per share (EPS) indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Flowers Foods FLO offers baked items and has a Zacks Rank # 2 (Buy). It has a trailing four-quarter average earnings surprise of 1.9%.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings implies growth of 1% and 4.2%, respectively, from the year-ago reported numbers.
Utz Brands Inc. UTZ, which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year EPS indicates growth of 28.1% from the year-ago reported number.
Zacks Investment Research
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