The tightening of the monetary policy to control the multi-decade high inflation, rising energy prices, ongoing Russian-Ukraine war, and intensifying supply disruptions due to the extended COVID-19 lockdowns in China are leading to concerns over the economy slipping into recession. While the major benchmark indexes rallied Wednesday after the Fed’s increase in benchmark rates by 50 basis points, they witnessed a freefall to register this year’s worst daily loss yesterday.
Moreover, the decline in GDP in the first quarter indicates a possible economic slowdown. According to JPMorgan Chase CEO Jamie Dimon, the chances of the Fed curbing inflation without instigating a recession stand at 33%.
Given this backdrop, since the stock market is expected to remain extremely volatile in the upcoming months, it could be wise to bet on dividend-paying stocks Weyerhaeuser Company (WY), General Mills, Inc. (GIS), and WestRock Company (WRK) for generating a steady income stream.
Weyerhaeuser Company (WY)
WY is one of the world's largest private owners of timberlands which began operations in 1900. It owns or controls approximately 11 million acres of timberlands in the U.S. and manages additional timberlands under Canada's long-term licenses. The company is also one of the largest manufacturers of wood products in North America.
On April 14, 2022, WY announced an agreement to purchase 80,800 acres of high-quality timberlands in North and South Carolina from a fund managed by Campbell Global for approximately $265 million. Devin Stockfish, president and CEO, said, "This transaction is a great example of our ongoing efforts to enhance our portfolio with high-quality, well-managed timberlands that generate solid returns for our shareholders."
While WY’s four-year average dividend yield is 4.55%, its current dividend translates to a 1.71% yield.
WY’s net sales increased 24.2% year-over-year to $3.11 billion in the first quarter, which ended March 31, 2022. The company’s adjusted EBITDA grew 36% year-over-year to $1.50 billion, while its net earnings came in at $771 million, representing a 13.2% year-over-year increase. Also, its EPS came in at $1.03, up 13.2% year-over-year.
Its revenue is expected to increase 5.9% year-over-year to $2.47 billion for the quarter ending September 30, 2022. It surpassed Street EPS estimates in three of the trailing four quarters. The stock has rallied 22.1% over the past nine months to close yesterday’s trading session at $40.65.
WY’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Quality, Value, Momentum, and Sentiment. Within the REITs - Diversified industry, WY is ranked #3 out of 50 stocks. To see WY’s rating for Growth and Stability as well, click here.
General Mills, Inc. (GIS)
GIS manufactures and markets branded consumer foods worldwide. The company operates in five segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. It offers ready-to-eat cereals, refrigerated yogurt, soup, and meal kits. The company operates 466 leased and 392 franchise ice cream parlors.
On March 23, 2022, GIS’ Chairman and CEO Jeff Harmening said, “Demand for our brands remains robust, and our team has shown great agility to overcome disruptions throughout the supply chain and deliver for our customers and consumers. We expect to drive strong growth in the fourth quarter, fueled by accelerating net price realization. With confidence in our plans and positive momentum on our business, we’re raising our guidance for fiscal 2022.”
GIS’ dividend pay-outs have grown at a 1.2% CAGR over the past five years and 1.3% over the past three years. While its four-year average dividend yield is 3.65%, its current dividend translates to a 2.88% yield.
GIS’ net sales came in flat at $4.54 billion in the third quarter ended February 27, 2022. The company’s net earnings grew 11% year-over-year to $660.30 million. Also, its EPS came in at $1.08, up 13% year-over-year.
Analysts expect GIS’ EPS and revenue to increase 11% and 6% year-over-year to $1.01 and $4.79 billion, respectively, for the quarter ending May 31, 2022. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 22.9% to close yesterday’s trading session at $70.75.
GIS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. In addition, it has a B grade for Stability and Quality as well.
We have also graded GIS’ for Growth, Momentum, Sentiment, and Value. Click here to access all of GIS’ ratings. GIS is ranked #20 out of 86 stocks in the Food Makers industry.
WestRock Company (WRK)
WRK provides fiber-based paper and packaging solutions in North America, South America, Europe, Asia, and Australia. It operates through two segments, Corrugated Packaging, and Consumer Packaging.
On May 5, 2022, David B. Sewell, WRK’s CEO, said, “While we are in the early innings of our transformation, we have made significant progress and have substantially more to come. Our future is bright and I’m confident we will capitalize on the tremendous opportunities ahead."
WRK’s four-year average dividend yield is 3.56%, and its current dividend translates to a 1.85% yield. The company is expected to pay a quarterly dividend of $0.25 per share on May 24, 2022.
WRK’s net sales increased 21.3% year-over-year to $5.40 billion in the second quarter, which ended March 31, 2022. The company’s adjusted EBITDA grew 33.3% year-over-year to $853.90 million, while its adjusted net income came in at $309 million, representing a 112.9% year-over-year increase. Also, its adjusted EPS came in at $1.17, up 116.7% year-over-year.
For the current quarter ending June 30, 2022, analysts expect WRK’s EPS to come in at $1.42, representing a 42% year-over-year increase. It surpassed the consensus EPS estimates in three of the trailing four quarters. In addition, its revenue is expected to increase 11.4% year-over-year to $20.87 billion in fiscal 2022. The stock has rallied 22.2% year-to-date to close yesterday’s trading session at $54.19.
It’s no surprise that WRK has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, the stock has a B grade for Growth, Value, and Sentiment.
Click here to see WRK’s ratings for Quality, Momentum, and Stability as well. In addition, WRK is ranked #5 out of 22 stocks in the B-rated Industrial - Packaging industry.
WY shares were unchanged in after-hours trading Friday. Year-to-date, WY has gained 1.43%, versus a -13.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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