Wall Street had a solid bull run in the first seven months of the year. However, markets have stayed volatile since August. The Fed, which has been aggressively increasing interest rates since March 2022 to curb sky-high inflation, in between, paused hikes twice — June and September — but concerns of an economic slowdown have escalated lately.
In fact, all three major indexes ended in the red last week despite the Federal Reserve keeping its policy interest rate unchanged.
This is because the post-FOMC statement from Fed Chair Jerome Powell dampened investors’ spirits as he maintained a hawkish stance and said that the fight against inflation is far from over and that at least another quarter percentage interest rate hike would be required this year.
The present benchmark lending rate at present is in the range of 5.25%-5.5%. Another 25-basis point hike in November will take the terminal interest rate of this current monetary tightening campaign to 5.6%, well above the 5.1% forecast in June.
Moreover, the central bank also lowered its interest rate cut forecast to two in 2024 from four projected in June. Also, the first interest rate cut won’t come before September.
These have raised concerns that inflationary pressures will prove to be stubborn and the economy might slip into a recession. Markets are thus likely to remain volatile for a longer period than expected earlier.
Stocks in Focus
Given this situation, dividend-yielding stocks should be an ideal choice for investors aiming to secure their portfolios. We recommend considering stocks that have recently raised their dividend payouts.
Four such stocks are Keurig Dr Pepper Inc. KDP, PNM Resources, Inc. PNM, Texas Instruments Incorporated TXN and Microsoft Corporation MSFT.
Keurig Dr Pepper is a beverage and coffee company in the United States and Canada, with annual revenues of more than $11 billion. KDP sells its products through at-home and away-from-home channels to retailers, including supermarkets, department stores, mass merchandisers, club stores and convenience stores; and restaurants, hospitality accounts, office coffee distributors and partner brand owners, as well as to consumers through its websites. Keurig Dr Pepper currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Sep 19, Keurig Dr Pepper declared that its shareholders would receive a dividend of $0.22 a share on Oct 13, 2023. KDP has a dividend yield of 2.42%. Over the past five years, Keurig Dr Pepperhas increased its dividend four times, and its payout ratio at present sits at 47% of earnings. Check Keurig Dr Pepper’s dividend history here.
PNM Resources, through its subsidiaries, is engaged in distributing energy and energy-related businesses in the United States. It operates through two segments — Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). The PNM segment includes the retail electric utility operations of the company. PNM provides integrated electricity services that include the generation, transmission and distribution of electricity for retail electric customers in New Mexico.
On Sep 19, PNM Resources announced that its shareholders would receive a dividend of $0.37 a share on Nov 10, 2023. PNM has a dividend yield of 3.28%. Over the past five years, PNM Resources has increased its dividend five times, and its payout ratio at present sits at 54% of earnings. Check PNM Resources’ dividend history here.
Texas Instruments is an original equipment manufacturer of analog, mixed-signal and digital signal processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe.
On Sep 21, Texas Instruments declared that its shareholders would receive a dividend of $1.30 a share on Nov 14, 2023. TXN has a dividend yield of 3.09%. Over the past five years, Texas Instrumentshas increased its dividend six times, and its payout ratio at present sits at 60% of earnings. Check Texas Instruments’ dividend history here.
Microsoft is one of the largest broad-based technology providers in the world. MSFT dominates the PC software market, with more than 73% of the market share for desktop operating systems.
On Sep 19, Microsoft announced that its shareholders would receive a dividend of $0.75 a share on Dec 14, 2023. MSFT has a dividend yield of 0.86%. Over the past five years, Microsoft has increased its dividend six times, and its payout ratio at present sits at 28% of earnings. Check Microsoft Corporation’s dividend history here.
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