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4 Stocks to Watch on Dividend Hikes as Economic Worries Worsen

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Wall Street has been going through a turbulent phase over the past couple of months despite starting the year on a high. Although all three major indexes closed higher last week, the volatility continues over growing concerns of the economy slipping into a recession later this year.

The Nasdaq had an impressive May, ending 5.8% higher, driven by a rally in tech stocks. The S&P 500 also ended 0.2% higher but the Dow suffered throughout the month, ending 3.5% down.

This is because stocks are struggling for direction as market participants have so far been unable to gauge the Fed’s future interest rate hike path.

Investors are now looking forward to the Fed’s next policy meeting scheduled for this month. Expectations are high that the Fed might finally pause hiking interest rates in this meeting but the picture isn’t clear yet. The central bank has already hiked interest rates on 10 consecutive occasions, with interest rates currently in the range of 5.00-5.25% range.

Inflation has lately started showing signs of easing but it is still a lot higher than the Fed’s target range of 2%. There are multiple other concerns that have been unsettling stocks. Although the unemployment rate rose to 3.7% in May, the highest in several years, the labor market continues to be resilient.

According to the latest jobs report from the Bureau of Labor Statistics, nonfarm payrolls increased by 339,000 in May against expectations of 190,000. The strong labor market has raised concerns that the Fed might be forced to continue with its aggressive interest rate hike stance.

Besides, market participants are also closely watching the global economy, which has further raised concerns. On Jun 8, the Eurozone slipped into recession after the 20-nation block’s economy declined 0.1% in the first quarter of 2023, after contracting in the final quarter of 2022.

Last month, Germany said that its economy entered recession after shrinking 0.3% between January and March. Also, China, which is considered the global manufacturing hub, has been witnessing a contraction in economic activity. Factory activity shrunk at the fastest pace in the first five months of the year in China, while service activity has advanced at its slowest pace in the past four months.

Stocks in Focus

Given this situation, betting on dividend-paying stocks would be a wise decision. Dividend stocks with a solid business plan and a proven track record are known for handling market volatility. An astute investor should thus consider stocks that have recently raised their dividend payments. Four such companies are UnitedHealth Group Incorporated (UNH - Free Report) , Johnson Controls International plc (JCI - Free Report) , Casey's General Stores, Inc. (CASY - Free Report) and TotalEnergies SE (TTE - Free Report) .

UnitedHealth Group provides a wide range of healthcare products and services, such as health maintenance organizations, point of service plans, preferred provider organizations  and managed fee-for-service programs. UNH has the largest and most diverse membership base within the managed-care organization market, which gives it significant competitive advantages.

On Jun 7, UnitedHealth Groupdeclared that its shareholders would receive a dividend of $1.88 a share on Jun 27, 2023. UNH has a dividend yield of 1.37%. Over the past five years, UnitedHealth Grouphas increased its dividend six times, and its payout ratio at present sits at 29% of earnings. Check UnitedHealth Group’s dividend history here.

Johnson Controls is a diversified technology company and a multi-industrial leader, with customers spanning over 150 countries. JCI’s operations include creating intelligent buildings, and providing efficient energy solutions and integrated infrastructure that work seamlessly together to deliver on the promise of smart cities and communities.

On Jun 7, Johnson Controls announced that its shareholders would receive a dividend of $0.37 a share on Jul 14, 2023. JCI has a dividend yield of 2.26%. Over the past five years, Johnson Controls has increased its dividend five times, and its payout ratio at present sits at 44% of earnings. Check Johnson Controls’ dividend history here.

Casey's General Stores operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. CASY also operates two stores under the name Tobacco City, selling primarily tobacco and nicotine products, one liquor store, and one grocery store. Casey’s General Stores sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

On Jun 6, Casey's General Stores declared that its shareholders would receive a dividend of $0.43 a share on Aug 15, 2023. CASY has a dividend yield of 0.70%. Over the past five years, Casey's General Stores has increased its dividend six times, and its payout ratio at present sits at 13% of earnings. Check Casey's General Stores’ dividend history here.

TotalEnergies SE is among the top five publicly traded global integrated oil and gas companies based on production volumes, proved reserves and market capitalization. TTE has operations in more than 130 countries across five continents.

On May 31, TotalEnergiesannounced that its shareholders would receive a dividend of $0.59 a share on Jul 17, 2023. TTE has a dividend yield of 3.74%. Over the past five years, TotalEnergieshas increased its dividend nine times, and its payout ratio at present sits at 17% of earnings. Check TotalEnergiesdividend history here.

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