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Komal Bhattar

3 Dividend Stocks to Increase Your Income

The September consumer price index came in more than expected, increasing 0.4% for the month and 8.2% from a year ago, still hovering near the highest levels since the early 1980s. The report rattled financial markets as traders priced in likely more aggressive interest rate hikes ahead. As the Federal Reserve had earlier stated its commitment to bring inflation under control, this report could mean further hawkishness from the Fed.

“The more inflation comes in above expectations, the more they’re going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy,” said Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute.

This is likely cementing the Fed’s fourth consecutive 0.75 percentage point hike in November. Moreover, the labor market has been showing resiliency in the face of surging interest rates, with the unemployment rate falling to 3.5% in September. Continued strong job growth will keep the Fed on course to continue with its rate hikes, increasing the chances of a recession.

Given the market turbulence, we think dividend-paying stocks Eli Lilly and Company (LLY), APA Corporation (APA), and Bluegreen Vacations Holding Corporation (BVH), which have a reliable dividend-paying history, could be solid additions to your portfolio.

Eli Lilly and Company (LLY)

LLY discovers, develops, and markets human pharmaceuticals worldwide. The company has collaborations with Incyte Corporation, Boehringer Ingelheim Pharmaceuticals, Inc., AbCellera Biologics Inc., Junshi Biosciences, Regor Therapeutics Group, Lycia Therapeutics, Inc., Kumquat Biosciences Inc., Entos Pharmaceuticals Inc., and Foghorn Therapeutics Inc.

On October 6, LLY announced the U.S. Food and Drug Administration’s (FDA) grant of Fast Track designation for the investigation of tirzepatide to treat adults with obesity and weight-related comorbidities. This should expedite the development and review of medicines to treat serious conditions and fill unmet medical needs.

Last month, the U.S. FDA granted approval for Retevmo® (selpercatinib, 40 mg & 80 mg capsules) for adult patients with locally advanced or metastatic non-small cell lung cancer (NSCLC). This product should add to the company’s revenues in the near term.

LLY’s $3.92 annual dividend yields 1.21% at its current share price. The company paid its last quarterly dividend of $0.98 on September 9, 2022. Its dividend payouts have increased at a 14.9% CAGR over the past three years and 12.9% CAGR over the past five years. The company has a record of seven consecutive years of dividend growth.

In the second quarter ended June 30, 2022, LLY’s revenue stood at $6.49 billion. Its operating income and net income came in at $1.21 billion and $952.50 million. The company’s EPS was $1.05, compared to $1.53 in the year-ago period.

The consensus revenue estimate of $6.92 billion for the third quarter ending September 2022 represents a 2.1% improvement year-over-year. Also, analysts expect its revenue to increase 1.7% year-over-year to $28.79 billion for the ongoing fiscal year.

The company’s shares have surged 199.5% over the past three years and 39.4% over the past year.

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

The stock also has a B grade for Stability, Quality, and Growth. Within the 164-stock Medical - Pharmaceuticals industry, it is ranked #16.

Beyond what is stated above, we have also given LLY grades for Value, Sentiment, and Momentum. Get all LLY ratings here.

APA Corporation (APA)

APA, through its subsidiaries, explores, develops, and produces oil and gas properties in the United States, Egypt, and the United Kingdom. The company also operates gathering, processing, and transmission assets in West Texas and holds ownership in four Permian-to-Gulf Coast pipelines.

On September 23, APA announced the engagement of GHD, a privately-owned global professional services company specializing in implementing and verifying sustainability projects. 

“We are pleased to work with GHD to support our ongoing efforts to verify the emissions we eliminate through various environmental projects,” said APA Environment, Health and Safety (EHS) Vice President Jessica Jackson. The company expects this to help meet its environmental goals and eliminate at least 1 million tonnes of CO2 by the end of 2024.

In the same month, APA’s Board of Directors announced an increase in its dividend on common shares from an annualized rate of 50 cents per share to $1.00 per share. This demonstrates the company’s strong balance sheet and cash flow positioning. Its next quarterly dividend of $0.25 is payable on November 22, 2022. The company’s $1 annual dividend yields 2.45% at its current share price.

For the fiscal second quarter that ended June 30, 2022, APA’s total revenues came in at $3.05 billion, up 71.3% year-over-year. Net income attributable to APA increased 193% year-over-year to $926 million. Moreover, its net income per share increased 230.5% year-over-year to $2.71.

The revenue estimate of $2.43 billion indicates an increase of 47.3% year-over-year for the quarter ended September 2022. Its EPS estimate of $2.12 represents a 116.6% improvement year-over-year in the same period.

The stock has gained 64.7% over the past year and 51.5% year-to-date.

APA has an overall B grade, equating to a Buy in our POWR Ratings system. Additionally, the stock has an A grade for Momentum and Quality and a B for Growth and Value. In the B-rated Energy - Oil & Gas industry, APA is ranked #16 of 94 stocks. 

We have also rated APA for Stability and Sentiment. Click here to learn APA’s POWR Ratings.

Bluegreen Vacations Holding Corporation (BVH)

BVH, a vacation ownership company, markets and sells vacation ownership interests (VOI) and manages resorts in leisure and urban destinations. The company also provides mortgage, title, reservation, construction design, and financing services.

On October 12, BVH announced its acquisition of a 320-room resort and spa in Panama City Beach, Florida, and two buildings in the Streamside at Vail Resort enclave in Vail, Colorado. These expansionary initiatives should be beneficial for the company.

BVH’s $0.30 annual dividend yields 1.72% at its current share price. The company paid its last quarterly dividend of $0.15 on August 22, 2022. Its dividend payouts have increased at an 18.1% CAGR over the past three years and 24.3% CAGR over the past five years.

For the second quarter that ended June 30, 2022, BVH’s total revenue increased 21.8% year-over-year to $235.57 million. Its system-wide sales of VOIs rose 21.5% year-over-year to $198.50 million. Moreover, the company’s free cash flow increased 35.6% year-over-year to $61.05 million.

For the quarter that ended September 30, 2022, BVH’s EPS and revenue are expected to increase 5.6% and 10.5% year-over-year to $1.21 and $237.07 million, respectively.

The stock gained 1.2% intraday to close the last trading session at $17.43.

It is no surprise that BVH has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Value, Sentiment, and Quality. BVH is ranked #1 of 21 stocks in the B-rated Travel – Hotels/Resorts industry.

Click here to see the other ratings of BVH for Growth, Momentum, and Stability.

LLY shares were trading at $331.44 per share on Thursday afternoon, up $6.87 (+2.12%). Year-to-date, LLY has gained 21.29%, versus a -22.25% 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.


3 Dividend Stocks to Increase Your Income
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