Last Friday, the United States stock indices fell and posted a second consecutive losing week. Each of the three broad benchmark indices lost more than 1% on the week, as the Russia-Ukraine conflict kept investors on high alert. Today, the stock indices have opened in the red as news of Russian president Vladimir Putin’s authorization to deploy Russian forces into two breakaway pro-Moscow regions in eastern Ukraine flooded in.
This geopolitical conflict has added to stock market volatility, while investors were already on edge by the Federal Reserve’s hawkish stance. Thomas Hayes, a managing member at Great Hill Capital LLC in New York, worries that the conflict might create more volatility until international leadership steps in.
Therefore, we believe it might be reasonable to invest in the stable dividend-paying stocks Philip Morris International Inc. (PM) and SpartanNash Company (SPTN), trading near their 52-week highs. These stocks are rated B (Buy) in our proprietary POWR Ratings system.
Philip Morris International Inc. (PM)
PM engages in the manufacture and sale of cigarettes, other nicotine-containing products, smoke-free products, and related electronic devices and accessories. The company sells its products under the HEETS, HEETS Creations, HEETS Marlboro, and Parliament HeatSticks brands.
On December 13, PM declared the redemption of all of its outstanding 2.625% Notes due February 18, 2022, on January 18. As of December 13, 2021, the $500 million aggregate principal amount of the Notes was outstanding. This might reduce the company’s debt.
On December 9, PM announced a regular quarterly dividend of $1.25 per common share, which was payable to shareholders on January 10. Its annual dividend of $5.00 yields 4.48% on the prevailing share price. The dividend payouts have increased at a CAGR of 3% over the past three years and 3.5% over the past five years. The company has 13 years of consecutive dividend growth.
For the fiscal fourth quarter ended December 31, PM’s net revenues increased 8.9% year-over-year to $8.10 billion. Net earnings attributable to PM rose 5.9% from the prior-year quarter to $2.09 billion, while adjusted EPS, excluding currency, improved 11.9% from the same period the prior year to $1.41.
The consensus EPS estimate of $6.31 for fiscal 2022 indicates a 3.8% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $32.31 billion reflects a rise of 2.9% from the prior year. Moreover, PM has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 30.6% over the past year and 17.5% year-to-date to close Friday’s trading session at $111.61. It is currently trading 0.8% below its 52-week high of $112.48.
PM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PM has a Quality grade of A and a Stability grade of B. In the 12-stock Tobacco industry, it is ranked #5. The industry is rated B. Click here to see the additional POWR Ratings for PM (Growth, Value, Momentum, and Sentiment).
SpartanNash Company (SPTN)
SPTN engages in the distribution and retail of grocery products through its three broad segments of Food Distribution, offering stock-keeping units, such as dry groceries, produce, and dairy products; Military, for selling and distributing grocery products to military commissaries; and Retail, for operating neighborhood markets.
On February 8, SPTN announced the expansion of its partnership with Flashfood, a food waste reduction company, by adding 44 Family Fare and VG’s Grocery store locations throughout Michigan, Iowa, and Nebraska. This aligns with the company’s environmental, social, and governance strategy.
On January 25, SPTN declared that it would expand its distribution footprint with new operations out of a facility in Stockton, California. This is expected to bolster the company’s coast-to-coast supply capabilities.
On November 19, SPTN declared a quarterly dividend of $0.20 per common share, which was payable to its shareholders on December 30, 2021. This cumulates to an annual dividend of $0.80 and yields 2.97% on the prevailing share price. SPTN’s dividend payouts have increased at a 3.6% CAGR over the past three years and 5.9% CAGR over the past five years, and it has 11 years of consecutive dividend growth.
SPTN’s net sales increased 0.6% year-over-year to $2.07 billion in the fiscal third quarter ended October 9. Gross profit improved 1.4% from the prior-year period to $329.48 million. Adjusted earnings from continuing operations and its per-share value came in at $15.29 million and $0.43, respectively.
Analysts expect SPTN’s EPS to increase 8.5% year-over-year to $1.91 for the fiscal year 2022, while Street expects revenue to increase 1.4% from the prior year to $9.05 billion.
Over the past year, the stock has gained 48% and 4.7% year-to-date to close Friday’s trading session at $26.96. It is currently trading 4% below its 52-week high of $28.07.
It’s no surprise that SPTN has an overall B rating, which translates to Buy in our POWR Ratings system. SPTN has an A grade for Value and a B grade for Quality. It is ranked #15 out of the 84 stocks in the Food Makers industry. The industry is rated B.
To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for SPTN, click here.
PM shares were trading at $108.72 per share on Tuesday afternoon, down $2.89 (-2.59%). Year-to-date, PM has gained 14.44%, versus a -9.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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