The stock market has been on a rough ride with inflation wreaking havoc across consumer markets, the Russia-Ukraine war, and the multiple rate hikes. The multi-decade high inflation has prompted the Fed to enact the second consecutive 0.75 percentage point rate hike this week, which in turn is raising recession possibilities.
Moreover, the U.S. economy contracted for the second straight quarter, declining 0.9% at an annualized pace for the period April to June. In addition, the IMF has slashed its global growth projections for 2022 and 2023 to 3.2% and 2.9%, respectively. Given the gloomy outlook, investors seem to be increasingly favoring dividend stocks to ensure a stable income stream.
According to the latest CNBC delivering alpha investor survey, out of the 500 chief investment officers, equity strategists, and portfolio managers, 42% are most likely to buy stocks paying high dividends.
So, given the risk-off environment, we think it could be wise to buy high dividend stocks Honda Motor Co., Ltd. (HMC) and Kronos Worldwide, Inc. (KRO) now.
Honda Motor Co., Ltd. (HMC)
Headquartered in Tokyo, Japan, HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and others. It operates through four segments: Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.
On July 14, Kyndryl (KD), the world’s largest IT infrastructure service provider, announced a multi-year agreement with HMC to support its infrastructure transformation across U.S. manufacturing plants, research and development, captive finance, and sales operations. This collaboration is expected to help HMC harness data and bring more innovation to its customers.
HMC's $1.40 annual dividend yields 5.50% at its current share price.
HMC’s sales revenue increased 10.5% from the prior-year quarter to ¥14.55 trillion ($0.11 billion) in the fiscal quarter ended March 31, 2022. Operating profit for the quarter came in at ¥871.23 billion ($6.38 billion), reflecting an increase of 32% year-over-year, while its EPS came in at ¥411.09, up 8% year-over-year.
Analysts expect HMC’s revenue for the fiscal year ending March 2023 to come in at $120.44 billion, indicating an increase of 350.9% year-over-year. The company’s EPS is expected to grow 26.6% year-over-year to $3.47 in the same period. It has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters.
HMC’s stock has gained 4.3% over the past month to close the last trading session at $25.85.
HMC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
HMC also has an A grade in Value and a B in Quality and Stability. It is ranked #1 of 65 stocks in the Auto & Vehicle Manufacturers industry.
Beyond what is stated above, we’ve also rated HMC for Momentum, Sentiment, and Growth. Get all the HMC ratings here.
Kronos Worldwide, Inc. (KRO)
KRO produces and markets titanium dioxide pigments (TiO2) in North America and internationally. The company also provides technical services for its products.
Its $0.76 annual dividend yields 4.39% at its current share price. On May 18, 2022, KRO declared a quarterly dividend of $0.19 per share, which was payable on June 16, 2022. Its dividend payouts have increased at a CAGR of 1.9% over the past three years and 4.3% over the past five years.
KRO’s net sales increased 21.1% from the prior-year quarter to $562.90 million in the fiscal quarter ended March 31, 2022. The gross margin for the quarter came in at 149.30 million, reflecting an increase of 56% year-over-year, while its net income stood at $57.50 million, up 193.4% from the prior-year quarter. The company’s net income per share came in at $0.50, up 194.1% year-over-over.
Street expects KRO’s revenue for the fiscal quarter ended June 2022 to come in at $542 million, indicating an increase of 13.3% year-over-year. Also, the company’s EPS is expected to grow 118.2% year-over-year to $0.48 in the same period.
KRO’s shares have gained 31.8% over the past nine months and 22.8% over the past year to close the last trading session at $17.32.
It’s no surprise that the stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
KRO has a B grade in Growth, Stability, Value, and Sentiment. It is ranked #3 of 89 stocks in the A-rated Chemicals industry. To get KRO’s ratings for Momentum and Quality, click here.
HMC shares were trading at $25.60 per share on Friday afternoon, down $0.25 (-0.97%). Year-to-date, HMC has declined -8.74%, versus a -13.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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