Investors’ rising concerns over multi-decade high inflation, a negative GDP rate in the first quarter, the Russia-Ukraine war, and supply chain disruptions have placed the stock market under immense pressure lately. These factors have also increased the odds that the U.S. economy will slip into a recession. Last week, the Federal Reserve raised interest rates by 50 basis points and indicated further hikes are forthcoming in response to inflation.
The U.S. inflation rate, which was up 8.5% year-over-year in March, could climb further on rising energy and food prices and intensifying supply chain disruptions caused by the Russia-Ukraine war and extended COVID-19 lockdowns in China.
Therefore, we think it could be wise to bet on the shares of companies that possess inelastic demand for their products and offer a steady income stream through dividend payouts. Dividend stocks Anthem, Inc. (ANTM), Enterprise Products Partners L.P. (EPD), and Archer-Daniels-Midland Company (ADM) are well-positioned to deliver inflation-beating total returns.
Anthem, Inc. (ANTM)
ANTM in Indianapolis, Ind., and its subsidiaries function as a health benefits company in the United States. Commercial and Specialty Business, Government Business, IngenioRx, and Other are the company’s four operational segments. The company provides a spectrum of network-based managed care health benefit plans to large and small groups, individuals, Medicaid, and Medicare markets.
This month, ANTM announced the completion of its acquisition of Integra Managed Care, a Managed Long-Term Care Plan in New York that assists adults with long-term care needs and disabilities to live safely and independently in their own homes. Felicia Norwood, Executive Vice President of Anthem's Government Business Division, said, "Anthem and Integra's shared commitment to deliver high quality, comprehensive whole-health care across communities throughout New York ensures that our members will continue to receive the care and support services that they have come to expect."
ANTM declared a $1.28 quarterly dividend on April 19, 2022, payable on June 24, 2022. Its $5.12 annual dividend yields 1.05% at the current share price. Also, it has a 1.1% four-year average dividend yield. Its dividend payouts have increased at a 12.4% CAGR over the past five years.
For the first quarter, ending March 31, 2022, ANTM's revenue increased 17.6% year-over-year to $38.10 billion. Its adjusted net income grew 16% from its year-ago value to $2.02 billion, while its adjusted EPS amounted to $8.25, up 17.7% from its prior-year quarter. The company's cash and cash equivalents stood at $6.16 billion for the three months ended March 31, 2022.
The $7.75 consensus EPS estimate for the second quarter, ending June 30, 2022, represents 10.2% year-over-year growth. Analysts expect its revenue to increase 14.3% year-over-year to $38.04 billion for the same period. In addition, it has an impressive earnings history; it surpassed the consensus EPS estimate in each of the trailing four quarters.
The stock has soared 21.8% in price over the past year and 29.7% over the past nine months.
ANTM's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Sentiment, Stability, and Quality. Within the B-rated Medical - Health Insurance industry, it is ranked #2 of 10 stocks.
To see additional POWR Ratings for Growth, Value, and Momentum for ANTM, click here.
Note that ANTM is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Enterprise Products Partners L.P. (EPD)
Headquartered in Houston, Tex., EPD offers midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company has four operating segments: NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services; and Petrochemical & Refined Products Services.
Last month, EPD and Oxy Low Carbon Ventures, LLC (OLCV), a subsidiary of Occidental (OXY), agreed to work towards a potential carbon dioxide ("CO2") transportation and sequestration solution for the Texas Gulf Coast. The integrated project would initially emphasize providing services to emitters in the industrial corridors from the greater Houston to Beaumont/Port Arthur areas. The initiative would unite Enterprise's leadership position in the midstream energy sector with OLCV's extensive experience in subsurface characterization and CO2 sequestration.
In February, EPD announced that one of its affiliates had completed a $3.25 billion acquisition of Navitas Midstream Partners, LLC. The acquisition provides Enterprise a foothold in natural gas gathering, treating, and processing in the core of the Midland Basin of the Permian.
EPD declared a $0.47 quarterly dividend on April 7, 2022, payable on May 12, 2022. Its $1.86 annual dividend yields 7.2% at the current share price. Also, it has a four-year average dividend yield of 7.6%. And its dividend payouts have increased at a 2.3% CAGR over the past five years.
EPD's revenue increased 42.1% year-over-year to $13.01 billion for the first quarter ending March 31, 2022. Its operating income amounted to $1.67 billion, while its net income came in at $1.33 billion. The company's EPS stood at $0.59 over the period.
The $0.62 consensus EPS estimate for the second quarter, ending June 30, 2022, represents 22.2% year-over-year growth. Analysts expect EPD’s revenue to increase 33.9% year-over-year to $12.65 billion for the same period. Also, it has an impressive earnings history; it surpassed the consensus EPS estimate in three of the trailing four quarters. The stock has gained 11.9% in price over the past year.
EPD's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Momentum and Sentiment and a B grade for Value. Within the A-rated MLPs - Oil & Gas industry, it is ranked #11 of 33 stocks.
In total, we rate EPD on eight distinct levels. Beyond what we have stated above, we have also given EPD grades for Growth, Stability, and Quality. Get all the EPD ratings here.
Archer-Daniels-Midland Company (ADM)
ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients worldwide. The Chicago-based company has three operational segments, Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition. It acquires, stores, cleans, and transports agricultural raw materials, such as oilseeds, corn, wheat, milo, oats, and barley.
Last month, ADM announced that it would invest approximately $300 million to considerably expand its Decatur, Ill., alternative protein production since the company continues to amplify its capacity to meet strong demand growth. ADM will further improve its alternative protein capabilities by opening a new, state-of-the-art Protein Innovation Center in Decatur.
ADM declared a $0.40 quarterly dividend on May 4, 2022, payable on June 8, 2022. Its $1.60 annual dividend yields 1.9% at its current share price. Also, it has a 2.9% four-year average dividend yield. Its dividend payouts have increased at a 4.4% CAGR over the past five years.
For the first quarter, ending March 31, 2022, ADM's revenues increased 25.2% year-over-year to $23.65 billion. Its gross profit grew 23% from its year-ago value to $1.90 billion, while its adjusted net earnings improved 38.2% from its prior-year quarter to $1.08 billion. The company's EPS has risen 36.7% year-over-year to $1.90.
Analysts expect ADM's revenue to increase 9.4% year-over-year to $25.08 billion for the second quarter, ending June 30, 2022. The $1.62 consensus EPS estimate for the second quarter, ending June 30, 2022, represents a 22.2% improvement year-over-year. Furthermore, it has an impressive earnings history; it surpassed the consensus EPS estimate in each of the trailing four quarters.
The company's shares have surged 25.6% in price over the past year and 38.4% over the past nine months.
It is no surprise that ADM has an overall B rating, which equates to Buy in our POWR Ratings system. ADM has a B grade for Growth, Value, and Sentiment. Among the thirty-two stocks in the Agriculture industry, it is ranked #5.
Click here to see the additional POWR Ratings for ADM (Stability, Quality, and Momentum).
ANTM shares were trading at $488.85 per share on Wednesday morning, down $0.47 (-0.10%). Year-to-date, ANTM has gained 5.76%, versus a -15.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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