Check out These 3 Stocks if You Want to Get Rich Over Time Inflation is still running near the highest levels since 1980, despite Fed's aggressive efforts to tame it. Although economic uncertainties are rising, staying invested and focusing on long-term strategies could...
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Inflation is still running near the highest levels since 1980, despite Fed's aggressive efforts to tame it. Although economic uncertainties are rising, staying invested and focusing on long-term strategies could be wise. We believe fundamentally solid stocks Microsoft (MSFT), Abbott Laboratories (ABT), and Kroger (KR) could be ideal buys to garner steady returns over the long term. Moreover, these stocks have a reliable dividend-paying history. Read on.
According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) increased by 0.4% in September. On a 12-month basis, inflation was up 8.2%, still hovering near the highest levels since the early 1980s.
Moreover, consumer spending was flat in September as prices increased sharply. A separate report also showed that import prices fell 1.2% in September, slightly more than the estimate, while exports declined 0.8%.
Though The Fed has approved three consecutive interest rate increases of 0.75 percentage points and is expected to follow November with the same hike, inflation shows no signs of slowing down.
On top of it, Ken Griffin, Citadel's founder and CEO believes the central bank has a difficult job ahead of bringing down prices while not slowing the economy too much.
However, it is important to stay invested and focus on long-term strategy. We think fundamentally strong stocks Microsoft Corporation (MSFT), Abbott Laboratories (ABT), and The Kroger Co. (KR) could generate steady returns over the coming years. Furthermore, these stocks have an impressive dividend-paying record.
Microsoft Corporation (MSFT)
MSFT is a tech giant that develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On October 12, it was reported that MSFT and Mercedes-Benz collaborated for a new MO360 Data Platform to make vehicle production more efficient, resilient, and sustainable where Benz is connecting its around 30 passenger car plants worldwide to the Microsoft cloud, enhancing transparency and predictability across its digital production and supply chain.
The platform is already available to teams in EMEA and will be deployed in the United States and China.
On September 26, MSFT and Ontario Power Generation announced a Canada-first strategic partnership to manage climate change and drive sustainable growth across Ontario. The agreement will enable MSFT to advance progress on its 100/100/0 by 2030 goal to power its data centers with carbon-free energy globally.
On September 20, MSFT declared a quarterly dividend of $0.68 per share, payable to shareholders on December 8, reflecting a 10% increase over the previous quarter's dividend. This reflects the cash generation ability of the company. Its annual dividend of $2.72 yields 1.19% on prevailing prices.
The company's dividend payouts have increased at a 10.5% CAGR over the past three years and a 9.7% CAGR over the past five years. MSFT has a record of 17 years of consecutive dividend growth.
MSFT's total revenue increased 12.4% year-over-year to $51.87 billion in the fourth quarter that ended June 30. Its net cash from operations grew 8.5% from the year-ago value to $24.63 billion, while its net income improved 1.7% year-over-year to $16.74 billion. The company's net earnings per common share increased 2.8% from its year-ago value to $2.23.
The consensus EPS estimate of $10.13 for the fiscal year ending June 2023 indicates a 10% improvement year-over-year. Its consensus Revenue of $219.65 billion for the same year represents a rise of 10.8% year-over-year. MSFT has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has declined marginally over the past five days to close its last trading session at $228.56.
MSFT's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MSFT is rated a B in Stability and Quality. Within the Software – Business industry, it is ranked #10 out of 51 stocks.
To see additional POWR Ratings for Value, Growth, Momentum, and Sentiment for MSFT, click here.
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells a diversified line of healthcare products. The company operates through four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices.
On September 8, ABT announced three-year data showing the positive impact of the Amplatzer Piccolo Occluder on treating babies with a potentially life-threatening hole in the heart. Smaller than a pea and the world's first and only minimally invasive, transcatheter treatment approved to close a PDA in premature infants with this common congenital heart defect, this device moves ABT closer in its aim of developing lifesaving pediatric devices.
On September 15, ABT declared a quarterly common dividend of 47 cents per share, payable on November 15, 2022. Its annual dividend of $1.88 yields 1.86 % on prevailing prices. The company's dividend payouts have increased at a 13.7% CAGR over the past three years and a 12.1% CAGR over the past five years. Moreover, ABT has nine years of consecutive dividend growth records.
For the second quarter that ended June 30, 2022, ABT's net sales increased 10.1% year-over-year to $11.25 billion. The company's operating earnings grew 70.6% from the prior-year period to $2.38 billion. Also, its net earnings increased 69.7% year-over-year to $2.02 billion, while its adjusted EPS rose 22.2% from the prior-year period to $1.43.
ABT has surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
The stock has fallen marginally over the past five days to close the last trading session at $100.91.
ABT's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #3 of 145 stocks in the Medical – Devices & Equipment industry.
Beyond what we've stated above, we have also given ABT grades for Growth, Value, and Momentum. Get all ABT ratings here.
The Kroger Co. (KR)
KR operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses.
On October 14, KR and Albertsons Companies (ACI) announced that they have entered into a definitive agreement under which the companies will merge, aiming to expand the customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience. The combined company should drive profitable growth and sustainable value for all stakeholders.
On September 16, KR announced the official opening of a new spoke in Birmingham, Alabama, which will operate as a seamless extension of the regional fulfillment center in Atlanta, making Kroger Delivery available to more customers in the greater Birmingham area. The expansion should help drive up the revenue of the company over time.
On September 15, KR declared a quarterly dividend of 26 cents per share to be paid to shareholders on December 1, 2022. Its annual dividend of $1.04 yields 2.41% on prevailing prices. The company's dividend payouts have increased at a 15.3% CAGR over the past three years and a 12.9% CAGR over the past five years. The company has a record of 15 years of consecutive dividend growth.
KR's sales increased 9.3% year-over-year to $34.64 billion in the fiscal second quarter ending August 13. Its operating profit increased 13.7% year-over-year to $954 million. The company's adjusted EBITDA grew 10.9% from the year-ago value to $7.63 billion, while its adjusted EPS improved 12.5% year-over-year to $0.90.
Analysts expect KR's revenue for the fiscal year ending January 2023 to come in at $148.32 billion, indicating an increase of 7.6% year-over-year. The company's EPS is expected to grow 10.6% year-over-year to $4.07 in the same year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.
KR has gained 11.8% over the past year to close the last trading session at $43.16.
The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. KR has a B grade in Quality, Value, and Growth. It is ranked #8 of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Click here to see the additional POWR Ratings for KR for Momentum, Stability, and Sentiment.
MSFT shares were trading at $236.56 per share on Monday morning, up $8.00 (+3.50%). Year-to-date, MSFT has declined -29.20%, versus a -21.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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