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Zacks.com featured highlights include Kroger, The Home Depot, Target and Big Lots
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For Immediate Release
Chicago, IL – October 13, 2022 – Stocks in this week’s article are The Kroger Co. (KR - Free Report) , The Home Depot, Inc. (HD - Free Report) , Target Corp. (TGT - Free Report) and Big Lots, Inc. (BIG - Free Report) .
4 Dividend-Paying Retail Stocks to Shield from Volatility
Investors seem to be nervous and are treading Wall Street with utmost caution as worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve’s hawkish stance to tame inflation might push the economy into a recession.
A higher interest rate environment may hit consumer spending activity and this may not be good news for companies in the retail sector. Players in the industry may have to walk a tightrope to woo budget-conscious shoppers. Rising prices of groceries and other essentials are compelling consumers to hold back on discretionary spending and industry participants might turn to promotions and discounts to attract shoppers.
Retailers are keeping their fingers crossed and pinning hopes on stimulus savings from last year, steady wage gains and a lower unemployment rate that should help keep demand alive. Markedly, the U.S. unemployment rate dropped to 3.5% in September from 3.7% a month earlier, while nonfarm payrolls climbed 263,000 for the month. We also note that average hourly wages rose 5% from a year ago and 0.3% on a month-on-month basis.
The aforementioned factors do make us optimistic but one should be mindful that the sector is not fully immune to the headwinds that have gripped the stock market lately. On that note, investing in high-quality dividend stocks such as The Kroger Co., The Home Depot, Inc., Target Corp. and Big Lots, Inc. might fetch you promising returns.
Our Choices
Kroger: The company, which operates in the thin-margin grocery industry, has been undergoing a complete makeover not only with respect to products but also in terms of the way consumers prefer shopping grocery. The company has been adding new products as well as eyeing technological expansion to enhance its omnichannel reach.
Kroger has been making significant investments to enhance product freshness and quality and expand digital capabilities. This Zacks Rank #2 (Buy) company has been introducing items under its “Our Brands” portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kroger has an estimated long-term earnings growth rate of 11.7%. The company pays out a quarterly dividend of 26 cents ($1.04 annualized) per share, giving a 2.3% yield at the current stock price. KR’s payout ratio is 21, with a five-year dividend growth rate of 13.2%. (Check KR’s dividend history here).
Home Depot: The world’s largest home improvement specialty retailer has been witnessing continued demand for its products and assortments, despite broad-based inflation. The company is also benefiting from continued strength in both the Pro and DIY categories as well as digital prowess. Higher remodeling home activity amid rising new home prices should benefit Home Depot.
Home Depot has an estimated long-term earnings growth expectation of 11.2%. This Zacks Rank #3 (Hold) company pays out a quarterly dividend of $1.90 ($7.60 annualized) per share, giving a 2.7% yield at the current stock price. HD’s payout ratio is 47, with a five-year dividend growth rate of 16.8%.
Target: This general merchandise retailer has been making investments to enhance omnichannel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Target has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. The company is always striving to build on its partnerships, especially with popular and high-profile brands.
Target has an estimated long-term earnings growth rate of 9.9%. This Zacks Rank #3 company pays out a quarterly dividend of $1.08 ($4.32 annualized) per share, giving a 2.8% yield at the current stock price. TGT’s payout ratio is 41, with a five-year dividend growth rate of 8.1%.
Big Lots: The company has been gaining from its transformation initiative, referred to as Operation North Star, which encompasses driving top-line growth, cost containment, and enhancement of systems and infrastructure. With regard to its brands, Broyhill and Real Living have been performing well. Additionally, Big Lots intends to strengthen its balance sheet through asset monetization.
Big Lots has an estimated long-term earnings growth rate of 12%. This Zacks Rank #3 company pays out a quarterly dividend of 30 cents ($1.20 annualized) per share, giving a 6.8% yield at the current stock price. BIG’s payout ratio is 52, with a five-year dividend growth rate of 2%.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Kroger, The Home Depot, Target and Big Lots
For Immediate Release
Chicago, IL – October 13, 2022 – Stocks in this week’s article are The Kroger Co. (KR - Free Report) , The Home Depot, Inc. (HD - Free Report) , Target Corp. (TGT - Free Report) and Big Lots, Inc. (BIG - Free Report) .
4 Dividend-Paying Retail Stocks to Shield from Volatility
Investors seem to be nervous and are treading Wall Street with utmost caution as worries about a global slowdown and a possible recession loom large over the stock market. Market pundits fear that the Federal Reserve’s hawkish stance to tame inflation might push the economy into a recession.
A higher interest rate environment may hit consumer spending activity and this may not be good news for companies in the retail sector. Players in the industry may have to walk a tightrope to woo budget-conscious shoppers. Rising prices of groceries and other essentials are compelling consumers to hold back on discretionary spending and industry participants might turn to promotions and discounts to attract shoppers.
Retailers are keeping their fingers crossed and pinning hopes on stimulus savings from last year, steady wage gains and a lower unemployment rate that should help keep demand alive. Markedly, the U.S. unemployment rate dropped to 3.5% in September from 3.7% a month earlier, while nonfarm payrolls climbed 263,000 for the month. We also note that average hourly wages rose 5% from a year ago and 0.3% on a month-on-month basis.
The aforementioned factors do make us optimistic but one should be mindful that the sector is not fully immune to the headwinds that have gripped the stock market lately. On that note, investing in high-quality dividend stocks such as The Kroger Co., The Home Depot, Inc., Target Corp. and Big Lots, Inc. might fetch you promising returns.
Our Choices
Kroger: The company, which operates in the thin-margin grocery industry, has been undergoing a complete makeover not only with respect to products but also in terms of the way consumers prefer shopping grocery. The company has been adding new products as well as eyeing technological expansion to enhance its omnichannel reach.
Kroger has been making significant investments to enhance product freshness and quality and expand digital capabilities. This Zacks Rank #2 (Buy) company has been introducing items under its “Our Brands” portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kroger has an estimated long-term earnings growth rate of 11.7%. The company pays out a quarterly dividend of 26 cents ($1.04 annualized) per share, giving a 2.3% yield at the current stock price. KR’s payout ratio is 21, with a five-year dividend growth rate of 13.2%. (Check KR’s dividend history here).
Home Depot: The world’s largest home improvement specialty retailer has been witnessing continued demand for its products and assortments, despite broad-based inflation. The company is also benefiting from continued strength in both the Pro and DIY categories as well as digital prowess. Higher remodeling home activity amid rising new home prices should benefit Home Depot.
Home Depot has an estimated long-term earnings growth expectation of 11.2%. This Zacks Rank #3 (Hold) company pays out a quarterly dividend of $1.90 ($7.60 annualized) per share, giving a 2.7% yield at the current stock price. HD’s payout ratio is 47, with a five-year dividend growth rate of 16.8%.
Target: This general merchandise retailer has been making investments to enhance omnichannel capabilities, develop new brands, refurbish stores and expand same-day delivery options to provide a seamless shopping experience to customers. Target has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail landscape. The company is always striving to build on its partnerships, especially with popular and high-profile brands.
Target has an estimated long-term earnings growth rate of 9.9%. This Zacks Rank #3 company pays out a quarterly dividend of $1.08 ($4.32 annualized) per share, giving a 2.8% yield at the current stock price. TGT’s payout ratio is 41, with a five-year dividend growth rate of 8.1%.
Big Lots: The company has been gaining from its transformation initiative, referred to as Operation North Star, which encompasses driving top-line growth, cost containment, and enhancement of systems and infrastructure. With regard to its brands, Broyhill and Real Living have been performing well. Additionally, Big Lots intends to strengthen its balance sheet through asset monetization.
Big Lots has an estimated long-term earnings growth rate of 12%. This Zacks Rank #3 company pays out a quarterly dividend of 30 cents ($1.20 annualized) per share, giving a 6.8% yield at the current stock price. BIG’s payout ratio is 52, with a five-year dividend growth rate of 2%.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1990909/4-dividend-paying-retail-stocks-to-shield-from-market-volatility
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.