The stock market roared back on Thursday, seeking to recover from a significant sell-off. The tech-heavy Nasdaq Composite rose 3.1%, the S&P 500 gained 2.5%, and the Dow Jones Industrial Average gained 1.9%. However, since the beginning of the year, the market swings have left the broader stock market sharply lower, with the S&P down roughly 10% year-to-date and the Nasdaq 100 slipping around 20% from its all-time high hit last November.
Concerns over a forthcoming 50-basis point rate hike by the Fed in May, surging inflation, intensifying geopolitical tensions, and extended COVID-19 lockdowns in China are major factors behind the market’s recent choppiness.
So, because the market’s turbulence is not expected to ease anytime soon, we think dividend aristocrats Sysco Corporation (SYY) and Nucor Corporation (NUE) could be ideal additions to one’s portfolio to generate a steady income stream.
Sysco Corporation (SYY)
Houston, Tex.-based SYY markets and distributes food and related products primarily to the food service or food-away-from-home industry in the United States. It operates through U.S. Foodservice Operations; International Foodservice Operations; SYGMA; and Other segments.
On April 28, 2022, SYY announced a two-cent increase in its quarterly dividend to $0.49 per share from the current $0.47 per share. The new dividend, payable on July 22, demonstrates the company’s strong cash flow position and capital allocation.
On February 14, 2022, SYY completed the acquisition of The Coastal Companies, a leading distributor of fresh produce and a value-added processor. The acquisition should operate as part of SYY’s specialty produce business, FreshPoint. This should be strategically beneficial for SYY because it is expected to enhance FreshPoint’s service in the Mid-Atlantic region, diversify its portfolio and maximize growth.
The company’s $1.96 annual dividend yields 2.13% at its current share price. It paid its last quarterly dividend of $0.47 on April 22, 2022. Its dividend payouts have increased at a 7.8% CAGR over the past three years and 8% over the past five years. SYY has a record of 25 consecutive years of dividend growth.
SYY’s sales increased 41.2% from the prior-year quarter to $16.3 billion in the quarter ended Jan. 1, 2022. Its gross profit for the quarter came in at $2.9 billion, reflecting a 37.8% increase year-over-year, while the non-GAAP EBITDA stood at $670.70 million, up 62.9% year-over-year. The company’s EPS was $0.57, reflecting a 235.3% increase from the prior-year quarter.
The $0.55 consensus EPS estimate for its fiscal quarter ended March 31, 2022, represents a 150.9% improvement year-over-year. The $15.9 billion consensus revenue estimate for the same quarter represents a 34.5% increase from the same period last year.
SYY has gained 19.9% in price over the past nine months and 12.4% year-to-date to close the last trading session at $88.32.
SYY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SYY also has a B grade in Growth and Value. It is ranked #15 of 87 stocks in the B-rated Food Makers industry.
Beyond what is stated above, we have also rated SYY for Momentum, Stability, Sentiment, and Quality. Get all the SYY ratings here.
Nucor Corporation (NUE)
NUE in Charlotte, N.C., is focused on manufacturing steel and steel products through its segments Steel Mills; Steel Products; and Raw Materials.
On April 22, 2022, NUE announced its partnership with the University of Kentucky (UK) Research Foundation to test an innovative carbon dioxide (CO2) capture system at Nucor Steel Gallatin. The high-integrated technology can capture CO2 emissions generated from natural gas power plants and industrial facilities. This is expected to help the company fulfill its environmental goal of lowering energy consumption across various sectors and managing the associated costs.
Its $2 annual dividend yields 1.24% at its current share price. It declared its last quarterly dividend of $0.50 on February 22, 2022. Its dividend payouts have increased at a 5.1% CAGR over the past three years and 3.8% over the past five years. It has a record of forty-eight consecutive years of dividend growth.
For its fiscal first quarter, ended April 2, 2022, NUE’s net sales increased 49.5% year-over-year to $10.49 billion. The net earnings attributable to NUE grew 122.4% from its year-ago value to $2.10 billion, while its EPS stood at $7.67, up 147.4% year-over-year.
The Street expects NUE’s EPS for its fiscal second quarter, ending June 30, 2022, to improve 57.6% year-over-year to $8.16. And the $11.79 billion consensus revenue estimate for the same period represents a 34.1% increase year-over-year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 96.9% in price to close yesterday’s trading session at $160.65. It has gained 40.7% year-to-date.
It is no surprise that NUE has an overall B rating, which equates to Buy in our POWR Ratings system. NUE has an A grade in Momentum and a B in Quality. Among the 33 stocks in the A-rated Steel industry, NUE is ranked #20.
In addition to the POWR Rating grades I have just highlighted, you can see the NUE’s growth, Value, Stability, and sentiment ratings here.
SYY shares were trading at $86.39 per share on Friday afternoon, down $1.93 (-2.19%). Year-to-date, SYY has gained 11.26%, versus a -11.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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