Amid the continuing Russia-Ukraine conflict and worsening logistical disruptions, a worse than estimated year-over-year jump in the consumer price index to 8.5% in March has dampened investor sentiment significantly. However, many economists believe that inflation is nearing its peak, and the overall economic scenario might soon begin to improve. Ahead of corporate earnings releases, investors are optimistic about the stock market’s recovery prospects.
Furthermore, JPMorgan Chase CEO Jamie Dimon recently said that he remained “optimistic on the economy, at least for the short term.” Therefore, investors seeking to dodge market volatility in the near term and secure capital appreciation in the long run, could bet on fundamentally strong dividend stocks that have been beaten down lately. Daniel Milan, the managing partner of Cornerstone Financial Services, said, “Growing dividends from high-quality companies can make a significant positive impact on a portfolio.” Investors’ interest in the dividend stocks is evident in the SPDR S&P Dividend ETF’s (SDY) 4.3% returns over the past month.
Given this backdrop, we think it could be wise to bet on hard-hit dividend stocks Lazard Ltd (LAZ), The Buckle, Inc. (BKE), and Kontoor Brands, Inc. (KTB), which offer more than a 4% yield and possess solid upside potential.
Lazard Ltd (LAZ)
Based in Hamilton, Bermuda, LAZ, together with its subsidiaries, operates as a financial advisory and asset management firm in North America, Europe, Asia, Australia, and Central and South America. It operates in two segments—Financial Advisory and Asset Management.
On Feb. 3, 2022, LAZ’s chairman and CEO, Kenneth M. Jacobs, said, “With unprecedented advisory activity and a robust level of assets under management, we continue to invest for growth and long-term shareholder value.”
LAZ’s four-year average dividend yield is 5.66%, while its current dividend translates to a 5.61% yield.
LAZ’s total operating revenue increased 14% year-over-year to $968 million for the fourth quarter, ended Dec. 31, 2021. Its adjusted net income came in at $217 million, up 13% year-over-year. And its EPS came in at $1.92, up 15.7% year-over-year.
For its fiscal year 2023, analysts expect LAZ’s revenue to increase 3.8% year-over-year to $3.01 billion. The stock’s EPS is expected to grow at a 7.3% rate per annum over the next five years. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined 25.5% in price over the past three months to close yesterday’s session at $33.49.
LAZ’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
LAZ has a B grade for Value, Momentum, and Quality. Within the B-rated Investment Brokerage industry, it is ranked #6 of 22 stocks. Click here to see the additional LAZ ratings for Growth, Stability, and Sentiment.
The Buckle, Inc. (BKE)
BKE ., in Kearney, Neb., operates as a retailer of casual apparel, footwear, and accessories for young men and women in the United States. It markets a selection of brand-name casual apparel as well as private label merchandise. The company operates 440 retail stores in 42 states.
BKE’s dividend payouts have grown at a 10.8% CAGR over the past three years. Its four-year average yield is 11.59%, while its current dividend yield is 4.37%.
BKE’s sales increased 19.5% year-over-year to $380.93 million for its fourth fiscal quarter, ended Jan. 29, 2022. Its net income came in at $83.92 million, up 27.9% year-over-year, while its EPS was $1.69, up 27.1% year-over-year.
Analysts expect BKE’s revenue to increase 5.8% to $1.42 billion in 2024. Its EPS is estimated to increase 16.2% to $5.3 in 2024. It surpassed EPS estimates in each of the four trailing quarters. The stock has declined 15.8% in price over the past three months to close yesterday’s session at $32.03.
BKE has an overall B rating, which equates to Buy in our POWR Ratings system. It has an A grade for Quality. Click here to see more of BKE’s component grades. It is ranked #19 of 66 stocks in the A-rated Fashion & Luxury industry.
Kontoor Brands, Inc. (KTB)
Greensboro, N.C.-based KTB is a lifestyle apparel company that designs, manufactures, procures, markets, and distributes denim, apparel, and accessories under the Wrangler, Lee, and Rock & Republic brands in the United States and internationally. It operates through two segments—Wrangler and Lee.
On March 1, 2022, Scott Baxter, KTB’s president, CEO, and chair, said, “Based on the breadth and diversification of growth catalysts, supported by investments in key enablers—such as the evolution of our Digital, ESG and demand creation platforms—we have confidence in our robust 2022 guidance, highlighting the continued momentum we expect in our business.”
KTB’s four-year average yield is 3.38%, while its current dividend translates to a 4.52% yield.
For the fourth quarter ended Dec. 31, 2021, KTB’s net revenues increased 3.1% year-over-year to $681.09 million. Its net income came in at $43.91 million, up 1.9% year-over-year, while its EPS was $0.75, compared to $0.74 in the previous period.
KTB’s revenue is expected to increase 9.3% to $2.71 billion in 2022, while its EPS is estimated to increase 10.8% per annum for the next five years. It surpassed EPS estimates in each of the four trailing quarters. And over the past three months, the stock has declined 21% in price to close yesterday’s session at $40.71.
KTB has an overall B rating, which equates to Buy in our POWR Ratings system. It has a B grade for Value and Quality. Click here to check additional ratings for KTB (Growth, Momentum, Stability, and Sentiment). KTB is ranked #21 of 66 stocks in the Fashion & Luxury industry.
LAZ shares were trading at $33.88 per share on Wednesday morning, up $0.39 (+1.16%). Year-to-date, LAZ has declined -21.44%, versus a -6.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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