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The Federal Reserve’s recent monetary tightening measures to crush inflation rattled investors’ sentiment. U.S. stocks snapped a two-day winning streak on Dec 14, with major bourses ending in negative territory after Fed Chair Jerome Powell said that the central bank needs more solid data to change its view on inflation.
The Fed has been hiking rates this year from almost zero at the fastest pace since the 1980s in order to curb 40-year high inflation. However, a rate hike doesn’t bode well for the broader economy as it impacts consumer spending levels and increases borrowing costs, including mortgages, business debt, and car loans.
Nonetheless, the Fed increased its interest rate by half a percentage point, pushing the benchmark federal-funds rate between 4.25% and 4.5%, which is the highest level since December 2007. Even though the latest increase in interest rate has been less than the series of four consecutive three-quarter point rate hikes this year, Fed officials expect to keep increasing rates through next year, with no further reduction until 2024. Such a new phase of policy tightening, in all likelihood, may well trigger more volatility in the stock market in the near term.
The Fed officials, in fact, now expect to raise interest rates between 5% and 5.5% next year and hold it at that range for some time in 2024. The policymakers unanimously said that the “ongoing increase” in interest rates to pull prices lower is appropriate even if it slows down the economy.
The Labor Department, by the way, announced that U.S. consumer prices did register their smallest annual increase in almost a year in November.
The consumer price index increased 7.1% on an annual basis last month, its smallest advance since December 2021. Yet, such readings remain well above the Fed’s 2% goal. Moreover, the Fed is only willing to change its monetary policy stance if inflation comes down to its target range in a sustainable fashion, which isn’t happening anytime soon.
Thus, with the Fed expected to remain hawkish in the near future, and consequently, markets remaining volatile, it would be judicious to invest in dividend aristocrats such as Archer-Daniels-Midland Company (ADM - Free Report) , W.W. Grainger, Inc. (GWW - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) for steady income.
These stocks remain unperturbed by market gyrations due to their strong fundamentals and better-quality business. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Archer Daniels Midland is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. This Zacks Rank #1 company is known for having raised its dividend for over 47 consecutive years.
Archer Daniels Midland has a dividend yield of 1.72%. ADM’s payout ratio presently sits at 22% of earnings. In the past 5-year period, ADM’s payout has advanced 4.1%. Check Archer Daniels Midland’s dividend history here.
Archer Daniels Midland Company Dividend Yield (TTM)
The Zacks Consensus Estimate for its current-year earnings has moved up 8.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 43.7%.
W.W. Grainger is a broad-line, business-to-business distributor of maintenance, repair and operating products and services. This Zacks Rank #2 company is known for having raised its dividend for 50 years in a row.
W.W. Grainger has a dividend yield of 1.18%. GWW’s payout ratio presently sits at 25% of earnings. In the past 5 years, GWW’s payout has advanced almost 6.2%. Check W.W. Grainger’s dividend history here.
The Zacks Consensus Estimate for its current-year earnings has moved up 4.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 48.3%.
Expeditors International of Washington is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight. This Zacks Rank #2 company is known for having raised its dividend for over 25 consecutive years.
The Zacks Consensus Estimate for its current-year earnings has moved up 10.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.1%.
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3 Best Dividend Aristocrats to Buy Ahead of 2023
The Federal Reserve’s recent monetary tightening measures to crush inflation rattled investors’ sentiment. U.S. stocks snapped a two-day winning streak on Dec 14, with major bourses ending in negative territory after Fed Chair Jerome Powell said that the central bank needs more solid data to change its view on inflation.
The Fed has been hiking rates this year from almost zero at the fastest pace since the 1980s in order to curb 40-year high inflation. However, a rate hike doesn’t bode well for the broader economy as it impacts consumer spending levels and increases borrowing costs, including mortgages, business debt, and car loans.
Nonetheless, the Fed increased its interest rate by half a percentage point, pushing the benchmark federal-funds rate between 4.25% and 4.5%, which is the highest level since December 2007. Even though the latest increase in interest rate has been less than the series of four consecutive three-quarter point rate hikes this year, Fed officials expect to keep increasing rates through next year, with no further reduction until 2024. Such a new phase of policy tightening, in all likelihood, may well trigger more volatility in the stock market in the near term.
The Fed officials, in fact, now expect to raise interest rates between 5% and 5.5% next year and hold it at that range for some time in 2024. The policymakers unanimously said that the “ongoing increase” in interest rates to pull prices lower is appropriate even if it slows down the economy.
The Labor Department, by the way, announced that U.S. consumer prices did register their smallest annual increase in almost a year in November.
The consumer price index increased 7.1% on an annual basis last month, its smallest advance since December 2021. Yet, such readings remain well above the Fed’s 2% goal. Moreover, the Fed is only willing to change its monetary policy stance if inflation comes down to its target range in a sustainable fashion, which isn’t happening anytime soon.
Thus, with the Fed expected to remain hawkish in the near future, and consequently, markets remaining volatile, it would be judicious to invest in dividend aristocrats such as Archer-Daniels-Midland Company (ADM - Free Report) , W.W. Grainger, Inc. (GWW - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) for steady income.
These stocks remain unperturbed by market gyrations due to their strong fundamentals and better-quality business. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Archer Daniels Midland is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. This Zacks Rank #1 company is known for having raised its dividend for over 47 consecutive years.
Archer Daniels Midland has a dividend yield of 1.72%. ADM’s payout ratio presently sits at 22% of earnings. In the past 5-year period, ADM’s payout has advanced 4.1%. Check Archer Daniels Midland’s dividend history here.
Archer Daniels Midland Company Dividend Yield (TTM)
Archer Daniels Midland Company dividend-yield-ttm | Archer Daniels Midland Company Quote
The Zacks Consensus Estimate for its current-year earnings has moved up 8.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 43.7%.
W.W. Grainger is a broad-line, business-to-business distributor of maintenance, repair and operating products and services. This Zacks Rank #2 company is known for having raised its dividend for 50 years in a row.
W.W. Grainger has a dividend yield of 1.18%. GWW’s payout ratio presently sits at 25% of earnings. In the past 5 years, GWW’s payout has advanced almost 6.2%. Check W.W. Grainger’s dividend history here.
W.W. Grainger, Inc. Dividend Yield (TTM)
W.W. Grainger, Inc. dividend-yield-ttm | W.W. Grainger, Inc. Quote
The Zacks Consensus Estimate for its current-year earnings has moved up 4.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 48.3%.
Expeditors International of Washington is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight. This Zacks Rank #2 company is known for having raised its dividend for over 25 consecutive years.
Expeditors International of Washington has a dividend yield of 1.19%. EXPD’s payout ratio presently sits at 14% of earnings. In the past 5 years, EXPD’s payout has advanced 9.3%. Check Expeditors International of Washington’s dividend history here.
Expeditors International of Washington, Inc. Dividend Yield (TTM)
Expeditors International of Washington, Inc. dividend-yield-ttm | Expeditors International of Washington, Inc. Quote
The Zacks Consensus Estimate for its current-year earnings has moved up 10.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.1%.