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Tags: high-yield dividend stocks | ibm | altria | hanesbrands

Bob Ciura: 3 High-Yield Stocks for Compelling Dividend Income

Bob Ciura: 3 High-Yield Stocks for Compelling Dividend Income
(Dreamstime)

Bob Ciura By Monday, 19 September 2022 11:20 AM EDT Current | Bio | Archive

The average dividend yield in the S&P 500 Index remains low at 1.6%. As a result, income investors largely have to settle for less dividend income when buying stocks. However, there are still quality companies with high dividend yields well above 5%.

Investors do not have to sacrifice income when it comes to International Business Machines (IBM), Altria Group (MO), and Hanesbrands Inc. (HBI). These 3 stocks have leadership positions in their industries, dividend yields above 5% and secure dividend payouts.

High-Yield Stock: International Business Machines

IBM is a global information technology company that provides integrated enterprise solutions for software, hardware, and services. IBM’s focus is running mission critical systems for large, multi-national customers and governments. IBM typically provides end-to-end solutions.

The company now has four business segments: Software, Consulting, Infrastructure, and Financing. IBM had annual revenue of ~$57.4B in 2021 (not including Kyndryl).

IBM reported solid results for Q2 2022 on July 18th, 2022. Company-wide revenue increased 16% while diluted adjusted earnings per share rose 43% to $2.31 on a year-over-year basis. Diluted GAAP earnings per share rose 79% to $1.61 in the quarter from $0.90 in the prior year.

Revenue for Software increased 12% due to 9% growth in Hybrid Platform & Solutions and a 19% increase in Transaction Processing. Revenue was up 17% for RedHat, 8% for Automation, 4% for Data & AI, and 5% for Security. Consulting revenue increased 18%. The book-to-bill ratio is a healthy 1.1X.

IBM is a high-yield Dividend Aristocrat with a 5.1% dividend yield.

High-Yield Stock: Altria Group

Altria is a consumer staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal and Copenhagen. The flagship brand continues to be Marlboro, which holds over 40% retail market share in the U.S.

Altria dominates the industry, as Marlboro alone controls over 40% of the domestic retail market. Altria is an impressive dividend stock that has increased its dividend for 50 consecutive years, placing it on the very exclusive list of Dividend Kings.

The company also has a 10% ownership stake in global beer giant Anheuser-Busch InBev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON).

On 07/28/22, Altria reported second quarter results. Adjusted diluted earnings-per-share increased 2.4% to $1.26 year-over-year. Net revenue stood at $6.5 billion, down by 5.7% year-over-year. Reported diluted earnings per share stood at $0.49, down by 57.8% year-over-year. Revenue decreased 4.1% to $5.37 billion year-over-year.

Meanwhile, Altria reported approximately $750 million remaining under the company’s existing $3.5 billion share repurchase program which is expected to complete by December 31, 2022. The company also reaffirmed full-year 2022 adjusted diluted earnings-per-share guidance of $4.79-$4.93 which represents an adjusted diluted earnings-per-share growth rate of 4% to 7%.

Altria maintains a target payout ratio of 80% of its annual adjusted earnings-per-share. This keeps the dividend payout manageable for the company, while providing shareholders with a competitive payout. Shares currently yield 8.9%.

High-Yield Stock: Hanesbrands

Our final pick is a lesser-known stock, but it is a strong dividend payer nonetheless. Hanesbrands is a leading marketer of everyday basic innerwear and activewear apparel. It sells its products under well-known brands, including Hanes and Champion, in America, Europe, Australia and the Asia-Pacific region.

In mid-August, Hanesbrands reported (8/11/22) financial results for the second quarter of fiscal 2022. Sales decreased by 11% over last year’s quarter due to a ransomware attack and soft point-of-sale trends. Global Champion brand and the U.S. innerwear business incurred a decrease in sales of 20% and 12%, respectively. The company was also hurt by supply chain disruptions and high inflation. As a result, its adjusted earnings-per-share plunged -36%, from $0.47 to $0.28.

Due to the above headwinds, Hanesbrands expects a -2% decline in revenue. However, the company expects to remain profitable with estimated adjusted earnings-per-share of $1.11-$1.23 for the full year. On the bright side, Hanesbrands now has a long-term growth plan, which includes growing the Champion brand globally, growing Innerwear sales with products that appeal to young consumers and improving online sales.

With a dividend payout ratio of 50% expected for 2022, the dividend appears to be sufficiently covered by earnings. Shares currently yield 6.9%.
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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

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BobCiura
The average dividend yield in the S&P 500 Index remains low at 1.6%. As a result, income investors largely have to settle for less dividend income when buying stocks. However, there are still quality companies with high dividend yields well above 5%.
high-yield dividend stocks, ibm, altria, hanesbrands
753
2022-20-19
Monday, 19 September 2022 11:20 AM
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