On Monday, the broad market indices posted marginal gains. The S&P 500 gained 0.3%, the tech-heavy Nasdaq Composite added 0.4%, and the Dow Jones Industrial Average rose less than 0.1%. Investors are currently anticipating the May inflation report later this week, while the Fed appears to be in a blackout period.
Following a Dogs of the Dow investment strategy, some portfolios are leaning toward 10 of the highest dividend-yielding, blue-chip stocks, which are part of the Dow Jones Industrial Average. The strategy became popular after the publication of Michael B. O’Higgins’ book, ‘Beating the Dow.’
Given the market’s heightened volatility, we think these Dogs of the Dow stocks, Merck & Co., Inc. (MRK), Amgen Inc. (AMGN), The Coca-Cola Company (KO), and Intel Corporation (INTC), might be solid additions to one’s investment portfolio now.
Merck & Co., Inc. (MRK)
MRK in Kenilworth, N.J., is a global healthcare company that operates through Pharmaceuticals and Animal Health segments. Its pharmaceuticals segment markets human health pharmaceuticals and vaccines, while the Animal Health segment offers veterinary pharmaceuticals, vaccines, and monitoring products.
On May 24, MRK declared a $0.69 per share quarterly dividend on its common stock for the third quarter of 2022, payable to shareholders on July 8. Its $2.76 annual dividend yields 3.07% on prevailing prices. The company’s dividend payouts have increased at a 10.9% CAGR over the past three years and an 8.6% CAGR over the past five years. It has a record of 12 consecutive years of dividend growth.
On May 24, MRK announced that the European Commission had approved KEYTRUDA, MRK’s anti-PD-1 therapy in combination with chemotherapy, as a treatment after surgery for adults with locally advanced or early-stage triple-negative breast cancer (TNBC). In April, it was approved for treating microsatellite instability-high (MSI-H) or deficient mismatch repair (dMMR) tumors in adults. These approvals allow the marketing of the KEYTRUDA regimen and monotherapy in all 27 European Union member states plus Iceland, Lichtenstein, Norway, and Northern Ireland, which might bolster the company’s revenues.
MRK’s sales were up 49.6% year-over-year to $15.90 billion for its fiscal first quarter of 2022. Its non-GAAP net income that excludes certain items improved 84.2% from the prior-year quarter to $5.43 billion. And its non-GAAP EPS that excludes certain items increased 84.5% from the same period the prior year to $2.14.
The Street expects MRK’s EPS to improve 29.8% year-over-year to $1.70 for the quarter ending June 30, 2022, while the Street's $13.90 billion revenue estimate for the same quarter indicates a 21.9% rise from the prior-year quarter. In addition, MRK has topped the consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 17.2% in price year-to-date to close yesterday’s trading session at $89.84. MRK has gained 21.2% over the past year.
MRK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
MRK has a Growth grade of A and a Value, Stability, Sentiment, and Quality grade of B. In the 165-stock Medical – Pharmaceuticals industry, it is ranked #1.
To see the additional POWR Rating for Momentum for MRK, click here.
Click here to checkout our Healthcare Sector Report for 2022
Amgen Inc. (AMGN)
AMGN in Thousand Oaks. Calif., discovers, manufactures, and delivers human therapeutics globally. The company is focused on the fields of inflammation, oncology, cardiovascular diseases, nephrology, and neuroscience.
On June 6, AMGN announced the approval of RIABNI (rituximab-arrx) by the U.S. Food and Drug Administration (FDA) for the treatment of adults with moderate to severe rheumatoid arthritis (RA) and who have had an inadequate response to one or more tumor necrosis factor (TNF) antagonist therapies. This approval might prove to be beneficial for the company.
On March 7, AMGN reported the groundbreaking of its new biomanufacturing facility at Holly Springs, N.C., which is expected to be operational by 2025. This should bolster the company’s productive capacity.
On March 2, AMGN declared a $1.94 per share dividend for the second quarter of 2022, payable on June 8. This cumulates to a $7.76 annual dividend and yields 3.12% at the current share price. AMGN’s dividend payouts have increased at a 10.1% CAGR over the past three years and 11.5% over the past five years. The company has achieved 10 consecutive years of dividend growth.
For its fiscal first quarter, ended March 31, AMGN’s total revenues increased 5.7% year-over-year to $6.24 billion. Its non-GAAP net income and non-GAAP EPS came in at $2.34 billion and $4.25, respectively, up 9% and 14.9% from the prior-year period.
The Street’s $17.46 EPS estimate for its fiscal year 2022 reflects a 2.1% rise year-over-year. Likewise, the Street’s $26.23 billion revenue estimate for the same year indicates a 1% rise from the prior year. In addition, AMGN has beaten the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 9.1% in price year-to-date and 3.8% over the past month to close yesterday’s trading session at $245.44.
This promising prospect is reflected in AMGN’s POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
AMGN has an A grade for Quality and a B grade for Growth and Stability. It is ranked #4 out of the 397 stocks in the Biotech industry.
Click here to see the additional POWR Ratings for Value, Momentum, and Sentiment for AMGN.
The Coca-Cola Company (KO)
This Atlanta, Ga.-based global non-alcoholic beverage manufacturer sells its beverages under popular brand names such as Coca-Cola, Sprite, Fanta, Dasani, Minute Maid, and Powerade.
On April 27, KO announced a dividend of 44 cents per common share, payable to shareholders on July 1. Its annual dividend of $1.76 yields 2.79% at its prevailing share price. The company’s dividend payouts have increased at a 2.7% CAGR over the past three years and a 3.7% CAGR over the past five years. It has a record of 59 consecutive years of dividend growth.
KO’s non-GAAP net operating revenues increased 16.4% year-over-year to $10.50 billion for its fiscal first quarter, ended April 1. Its non-GAAP net income and non-GAAP net income per share stood at $2.80 billion and $0.64, respectively, up 16.6% and 16.4% from the same period the prior year.
The $0.66 consensus EPS estimate for the quarter ending Sept. 30, 2022, indicates a 1.5% year-over-year increase. And the $10.77 billion consensus revenue estimate for the same period reflects an improvement of 10.5% from the prior-year quarter. In addition, KO has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.8% in price over the past year and 6.2% year-to-date to close yesterday’s trading session at $62.87.
KO has an overall B rating, which translates to Buy in our POWR Rating system.
KO has a B grade for Stability, Sentiment, and Quality. In the 35-stock Beverages industry, it is ranked #14. The industry is rated B.
To see the additional POWR Ratings for Growth, Value, and Momentum for KO, click here.
Intel Corporation (INTC)
INTC is a popular tech company that designs, manufactures, and sells computer products and technologies globally. The Santa Clara, Calif., company operates through the segments of CCG; DCG; IOTG; Mobileye; NSG; PSG; and All Other.
On May 10, INTC announced seven new 12th Gen Intel Core HX processors based on its performance hybrid architecture. Chris Walker, Intel corporate vice president, and general manager of Mobility Client Platforms, stated, “With the new core architecture and higher power limits of 12th Gen Intel Core HX processors, we’re enabling content creators to tackle the most demanding workflows like never before–for example, executing 3D renders in the background while continuing to iterate on other 3D assets in the scene. No more waiting around for processor-intensive workloads to finish, you can stay in the flow.”
On April 14, INTC declared a $0.365 per share quarterly dividend on its common stock, which was payable to shareholders on June 1. The company’s $1.46 annualized dividend yields 3.36% at the current share price. INTC’s dividend payouts have increased at a 5% CAGR over the past three years and 6.3% over the past five years. The company has had eight consecutive years of dividend growth.
For its fiscal first quarter, ended April 2, INTC’s operating income increased 17.5% year-over-year to $4.34 billion. Its net income improved 141.4% from the prior-year quarter to $8.11 billion, while EPS stood at $1.98, up 141.5% from the same period the prior year.
The $3.60 consensus EPS estimate for the fiscal year 2023 indicates a 2.3% year-over-year increase. Likewise, the $77.57 billion consensus revenue estimate for the same year reflects a 2.9% improvement from the prior year. Furthermore, INTC has topped consensus EPS estimates in each of the trailing four quarters.
The stock has declined in price marginally intraday to close yesterday’s trading session at $43.34.
INTC has an overall B rating, which equates to Buy in our proprietary rating system.
INTC has a Value grade of A and a Momentum and Quality grade of B. In the 95-stock Semiconductor & Wireless Chip industry, it is ranked #18. The industry is rated B.
In addition to the POWR rating grades we have stated above, one can see INTC ratings for Growth, Stability, and Sentiment here.
Click here to checkout our Semiconductor Industry Report for 2022
MRK shares were trading at $89.90 per share on Tuesday morning, up $0.06 (+0.07%). Year-to-date, MRK has gained 18.35%, versus a -13.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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