5 US dividend stocks to explore after the latest CPI data

November 14, 2022 07:12 AM PST | By Rupam Roy
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  • Energy Transfer raised its annual adjusted EBITDA guidance during its Q3 FY22 earnings release.
  • Altria Group narrowed its adjusted diluted EPS guidance for fiscal 2022.
  • Hanesbrands Inc. noted a YoY decline in its Q3 FY22 net sales.

The stubbornly high inflation has been one of the major concerns of Wall Street investors throughout the year. On the other hand, the aggressive approach of the central bank in bringing down the inflation to their two per cent target range has also weighed on the sentiments of market participants.

The Federal Reserve officials have raised the borrowing costs to a multi-year high in 2022, to curb the four-decade-high inflation. However, it has also raised concerns over a potential recession.

Although there is no apparent definition of recession, some analysts believe that if the economy contracts for two consecutive quarters, it signifies a recessionary period.

The US economy has contracted for the starting two quarters of the year, as per the GDP data released by the government. The policymakers have been raising the interest rates throughout the year to cool down the demand as well as the higher inflation.

Many investors tend to explore opportunities in dividend stocks amid uncertainties in the market.

So, let's explore some of the dividend stocks, which include Energy Transfer LP (NYSE: ET), Omega Healthcare Investors, Inc. (NYSE: OHI), Altria Group, Inc. (NYSE: MO), OneMain Holdings, Inc. (NYSE: OMF), and Hanesbrands Inc. (NYSE: HBI) after the latest CPI data showed that inflation has cooled off in the previous month.

Energy Transfer LP (NYSE: ET)

The stock of the energy firm, Energy Transfer was up over 48 per cent year-to-date (YTD) and about 33 per cent YoY. The company, which engages in natural gas and propane pipeline transportation, had a dividend yield of 8.69 per cent.

The stock of the energy firm touched its 52-week high of US$ 12.95 on November 1, 2022, after reporting its quarterly financial results and raising guidance. In the running quarter through November 11, it gained about 10 per cent.

Energy Transfer LP's revenue was US$ 22.93 billion in Q3 FY22, and its net income totaled US$ 1.32 billion. In the year-ago quarter, the propane pipeline transportation firm's net income was US$ 907 million on revenue of US$ 16.66 billion.

The company now expects its adjusted EBITDA to be between US$ 12.8 billion and US$ 13 billion in fiscal 2022, up from its prior guidance range of US$ 12.6 billion to US$ 12.8 billion.

Omega Healthcare Investors, Inc. (NYSE: OHI)

The stock of the healthcare-focused REIT firm, Omega Healthcare rose nearly nine per cent YTD and about 12 per cent YoY. In the running quarter, it gained about 10 per cent through November 11. The dividend yield of the REIT firm was 8.32 per cent and its P/E ratio was 18.52.

Omega Healthcare Investors Inc’s revenue decreased by US$ 42.2 million YoY to US$ 239.4 million in Q3 FY22. The company said that the decline in its revenue was primarily led by the asset sales completed throughout 2021 and 2022, and operator restructurings, among other factors.

The REIT firm’s net income was US$ 105.1 million in the reported quarter, a decline of US$ 37.8 million over the same quarter in 2021.

Altria Group, Inc. (NYSE: MO)

The American producer, and marketer of tobacco, cigarettes, and other related products, holds a dividend yield of 8.47 per cent. It is one of the major tobacco companies with operations in several international markets.

The MO stock decreased by about six per cent YTD and about one per cent YoY. However, in the running quarter, it added nearly 10 per cent through last Friday.

Altria Group's reported diluted EPS was US$ 0.12 per share in Q3 FY22, against a loss of US$ 1.48 apiece in the year-ago quarter. The Richmond-based tobacco company's revenue fell 3.5 per cent YoY to US$ 6.55 billion in this quarter.

The company narrowed its annual adjusted diluted EPS guidance to be between US$ 4.81 and US$ 4.89 per share, representing a jump of 4.5 per cent to six per cent YoY, respectively.

OneMain Holdings, Inc. (NYSE: OMF)

The American financial services provider, OneMain Holdings' dividend yield was 9.04 per cent. The stock of the financial services company, which mainly focuses on credit-related solutions, declined nearly 16 per cent YTD and about 22 per cent YoY.

In the running quarter, the OMF stock added over 42 per cent. The company offers credit-related products to its clients, which include consumer lending, credit insurance, etc.

OneMain Holdings' net interest income was US$ 895 million in Q3 FY22, and its net income totaled US$ 188 million, compared to a net income of US$ 288 million on net interest income of US$ 876 million in Q3 FY21.

Third quarter earnings highlights of Hanesbrands Inc (HBI)Source: ©Kalkine Media®; © Canva via Canva.com

Hanesbrands Inc. (NYSE: HBI)

The multinational apparel company, Hanesbrands Inc's dividend yield was 7.72 per cent. The company which manufactures a range of apparel and clothing products, lost over 53 per cent YTD and about 56 per cent YoY, from its stock price.

In the running quarter, it added over 11 per cent and touched its 52-week low of US$ 6.4 on November 9, 2022, following its Q3 FY22 earnings release.

In Q3 FY22, Hanesbrands Inc's net sales slumped seven per cent YoY to US$ 1.67 billion, and its diluted EPS was US$ 0.23, against US$ 0.43 per share in Q3 FY21.

Bottom line:

The latest CPI data by the Labor Department, which is a key measure to gauge inflation, showed that the US inflation has accelerated below eight per cent rate annually for the first time in several months.

The US inflation jumped by 7.7 per cent in October on an annual basis, its smallest surge since the beginning of the year. The figure was up 8.2 per cent in September, suggesting that the aggressive stance by the Federal Reserve helped in cooling demands in recent months while bringing down the soaring costs.

Many investors are now anticipating a smaller hike at the upcoming gathering of the Federal Reserve in December. On the other hand, the policymakers also indicated that they may consider easing their hawkish approach in the coming months, but the rate might go above the range than previously anticipated.

So, even though the CPI data came in better than anticipated, investors should consider all the risks and other uncertainties before putting their bets into any assets.


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