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2 Top Stocks to Buy Now for Dividends and Value Amid Market Turmoil
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Stocks tumbled to start the first full week of March. The Dow dropped 2.4%, while the S&P 500 tumbled 3%, and the Nasdaq plummeted 3.6%. The S&P 500 has now fallen around 13% from its records as Wall Street remains focused on the escalating Russian invasion of Ukraine.
No cease-fire agreement has been reached and investors are weighing the possibility of even heavier sanctions on Russia, including its crucial oil and energy sector. The longer the fighting goes, the more likely Wall Street will start to focus on the potential for a larger conflict ahead.
Taking a look at the larger 2022 downturn and volatility, investors don’t appear to be in full panic mode about the Russia/Ukraine situation. The benchmark index is down just around 3% from its late-January lows, which was weeks before the initial Russian attacks.
The Nasdaq is on the cusp of a bear market, down nearly 20% from its November records and 4% below its January 27 levels. Thankfully, Wall Street has proven it is willing to buy strong stocks they feel are trading at discounts. And the index has already seen nearly 12 months of gains washed away, significantly recalibrating valuations.
The conflict caused Jay Powell to turn more dovish last week, when the Fed chairman said he supported a 25-basis point hike to its core interest rate at its mid-March meeting, instead of 50 bps. There is no guarantee Powell and the Fed won’t raise rates by 0.50% to help combat 40-year inflation.
But no matter what happens, interest rates should remain historically low for years to come. This will leave many on Wall Street chasing returns in stocks, especially with 7.5% inflation. Let’s also remember that the U.S. economy has flashed signs of strength.
Investors who can handle the possibility of more downside and volatility might consider buying dividend-paying stocks that are offering solid value as well.
Broadcom is a semiconductor and infrastructure software solutions company. AVGO has bolstered its expansion and reach through mergers and acquisitions. The firm's portfolio provides exposure to smartphones, data centers, networking equipment, and other vital areas that present long-term opportunities.
Broadcom is in the midst of a strong run of top-line expansion, having posted 6% growth during its fiscal 2020 and 15% in FY21 (period ended October 31). This strength carried over into 2022 and AVGO topped our Q1 estimates on March 3 and provide solid guidance.
Broadcom’s adjusted first quarter earnings climbed 27% on 16% stronger sales, while also generating $3.4 billion in free cash flow. The solid start to the year showcases AVGO’s ability to navigate global supply chain issues and other economic setbacks.
The company also flexed its financial might and stability through buybacks and dividends. Broadcom repurchased $2.7 billion worth of its own stock last quarter, which is part of a $10 billion repurchase program it announced in December.
Image Source: Zacks Investment Research
Broadcom’s dividend yield sits at 2.9% to match Texas Instruments, crush the 30-year U.S. Treasury’s 2.2%, and blow away the S&P 500. The strong payout isn’t boosted by a falling stock, with AVGO up 164% in the last five years compared to the broader Semiconductors market’s 176%.
In the last two years, Broadcom has surged 133% to outpace the crucial space’s 96% run. Let’s also remember that many of the more growth-focused semiconductor stocks don’t pay dividends.
Broadcom stock hasn’t been immune to the 2022 selloff and closed regular hours Monday about 14% beneath its December records at $570.70 per share. AVGO, which lands a Zacks Rank #2 (Buy) at the moment, now trades nearly in line with its two-year median at 19.3X forward 12-month earnings and at reasonable levels compared to the Semi market. AVGO’s Zacks consensus price target marks 18% upside to Monday’s close, and 17 of the 23 brokerage recommendations Zacks has are “Strong Buys.”
Chevron is a U.S. oil and gas powerhouse that’s coming off a blowout 2021, driven by soaring oil and energy prices. CVX posted its most profitable year since 2014, with adjusted earnings of $15.6 billion, or $8.13 a share, up from $0.09 in 2020.
Meanwhile, its revenue surged 72% to come within touching distance of its 2018 levels at $162 billion. Last year’s backdrop also helped Chevron post record free cash flow of $21 billion.
Zacks estimates call for Chevron’s revenue to climb another 11% in 2022 to help lift its adjusted earnings by 49%. Plus, its FY22 and FY23 consensus earnings estimates have surged 22% and 27%, respectively since its late-January release to help it land a Zacks Rank #1 (Strong Buy) right now.
Oil prices rebounded in a serious way off their covid lows to around $65 a barrel by early March of 2021. Those levels seem tame, with oil sitting at roughly $120 a barrel at the end of trading Monday.
Image Source: Zacks Investment Research
Chevron, like many others in the oil and gas field, has decided to keep its costs under control this time around instead of chasing short-term gains amid rising oil prices. The company is passing on some of its savings to investors. The firm announced on March 1 that it raised its buyback guidance to between $5 to $10 billion per year, up from $3 to $5 billion. CVX’s strong balance sheet and solid footing also helped it raise its dividend by another 6% this year.
Its current 3.6% yield is not too far off its industry’s 4% average and blows away the 10-year U.S. Treasury’s 1.8%. Chevron shares have soared 47% in the last year to outpace its Oil and Gas-Integrated–International industry’s 34% climb. Stock is also up roughly 50% in the past decade compared to its highly-ranked industry’s 30% decline.
CVX shares jumped 1.8% to new records on Monday. Even though it sits at all-time highs, it’s trading at a discount to its own year-long median at 13.5X forward 12-month earnings. Chevron is also trading 50% below its 12-month highs and beneath where it was for much of 2017 through the early part of 2020. Wall Street remains very high on Chevron, which is committed to its own lower-carbon future. This includes its recently-announced $3.15 billion deal to buy Renewable Energy Group Inc.
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2 Top Stocks to Buy Now for Dividends and Value Amid Market Turmoil
Stocks tumbled to start the first full week of March. The Dow dropped 2.4%, while the S&P 500 tumbled 3%, and the Nasdaq plummeted 3.6%. The S&P 500 has now fallen around 13% from its records as Wall Street remains focused on the escalating Russian invasion of Ukraine.
No cease-fire agreement has been reached and investors are weighing the possibility of even heavier sanctions on Russia, including its crucial oil and energy sector. The longer the fighting goes, the more likely Wall Street will start to focus on the potential for a larger conflict ahead.
Taking a look at the larger 2022 downturn and volatility, investors don’t appear to be in full panic mode about the Russia/Ukraine situation. The benchmark index is down just around 3% from its late-January lows, which was weeks before the initial Russian attacks.
The Nasdaq is on the cusp of a bear market, down nearly 20% from its November records and 4% below its January 27 levels. Thankfully, Wall Street has proven it is willing to buy strong stocks they feel are trading at discounts. And the index has already seen nearly 12 months of gains washed away, significantly recalibrating valuations.
The conflict caused Jay Powell to turn more dovish last week, when the Fed chairman said he supported a 25-basis point hike to its core interest rate at its mid-March meeting, instead of 50 bps. There is no guarantee Powell and the Fed won’t raise rates by 0.50% to help combat 40-year inflation.
But no matter what happens, interest rates should remain historically low for years to come. This will leave many on Wall Street chasing returns in stocks, especially with 7.5% inflation. Let’s also remember that the U.S. economy has flashed signs of strength.
Investors who can handle the possibility of more downside and volatility might consider buying dividend-paying stocks that are offering solid value as well.
Image Source: Zacks Investment Research
Broadcom Inc. (AVGO - Free Report)
Broadcom is a semiconductor and infrastructure software solutions company. AVGO has bolstered its expansion and reach through mergers and acquisitions. The firm's portfolio provides exposure to smartphones, data centers, networking equipment, and other vital areas that present long-term opportunities.
Broadcom is in the midst of a strong run of top-line expansion, having posted 6% growth during its fiscal 2020 and 15% in FY21 (period ended October 31). This strength carried over into 2022 and AVGO topped our Q1 estimates on March 3 and provide solid guidance.
Broadcom’s adjusted first quarter earnings climbed 27% on 16% stronger sales, while also generating $3.4 billion in free cash flow. The solid start to the year showcases AVGO’s ability to navigate global supply chain issues and other economic setbacks.
The company also flexed its financial might and stability through buybacks and dividends. Broadcom repurchased $2.7 billion worth of its own stock last quarter, which is part of a $10 billion repurchase program it announced in December.
Image Source: Zacks Investment Research
Broadcom’s dividend yield sits at 2.9% to match Texas Instruments, crush the 30-year U.S. Treasury’s 2.2%, and blow away the S&P 500. The strong payout isn’t boosted by a falling stock, with AVGO up 164% in the last five years compared to the broader Semiconductors market’s 176%.
In the last two years, Broadcom has surged 133% to outpace the crucial space’s 96% run. Let’s also remember that many of the more growth-focused semiconductor stocks don’t pay dividends.
Broadcom stock hasn’t been immune to the 2022 selloff and closed regular hours Monday about 14% beneath its December records at $570.70 per share. AVGO, which lands a Zacks Rank #2 (Buy) at the moment, now trades nearly in line with its two-year median at 19.3X forward 12-month earnings and at reasonable levels compared to the Semi market. AVGO’s Zacks consensus price target marks 18% upside to Monday’s close, and 17 of the 23 brokerage recommendations Zacks has are “Strong Buys.”
Chevron Corporation (CVX - Free Report)
Chevron is a U.S. oil and gas powerhouse that’s coming off a blowout 2021, driven by soaring oil and energy prices. CVX posted its most profitable year since 2014, with adjusted earnings of $15.6 billion, or $8.13 a share, up from $0.09 in 2020.
Meanwhile, its revenue surged 72% to come within touching distance of its 2018 levels at $162 billion. Last year’s backdrop also helped Chevron post record free cash flow of $21 billion.
Zacks estimates call for Chevron’s revenue to climb another 11% in 2022 to help lift its adjusted earnings by 49%. Plus, its FY22 and FY23 consensus earnings estimates have surged 22% and 27%, respectively since its late-January release to help it land a Zacks Rank #1 (Strong Buy) right now.
Oil prices rebounded in a serious way off their covid lows to around $65 a barrel by early March of 2021. Those levels seem tame, with oil sitting at roughly $120 a barrel at the end of trading Monday.
Image Source: Zacks Investment Research
Chevron, like many others in the oil and gas field, has decided to keep its costs under control this time around instead of chasing short-term gains amid rising oil prices. The company is passing on some of its savings to investors. The firm announced on March 1 that it raised its buyback guidance to between $5 to $10 billion per year, up from $3 to $5 billion. CVX’s strong balance sheet and solid footing also helped it raise its dividend by another 6% this year.
Its current 3.6% yield is not too far off its industry’s 4% average and blows away the 10-year U.S. Treasury’s 1.8%. Chevron shares have soared 47% in the last year to outpace its Oil and Gas-Integrated–International industry’s 34% climb. Stock is also up roughly 50% in the past decade compared to its highly-ranked industry’s 30% decline.
CVX shares jumped 1.8% to new records on Monday. Even though it sits at all-time highs, it’s trading at a discount to its own year-long median at 13.5X forward 12-month earnings. Chevron is also trading 50% below its 12-month highs and beneath where it was for much of 2017 through the early part of 2020. Wall Street remains very high on Chevron, which is committed to its own lower-carbon future. This includes its recently-announced $3.15 billion deal to buy Renewable Energy Group Inc.