Morgan Stanley has said that the economic conditions have become increasingly difficult and has pointed three reliable dividend stocks to have in your portfolio in these difficult times, according to TipRanks in Yahoo Finance: Philip Mrrs Int, Citizens Finl Gr and AvalonBay.
The firm’s chief US equity strategist, Mike Wilsonspearheaded a recent note on the subject of defensive investmentespecially the investment in dividends.
Wilson lays out a clear strategy for dividend investors, beginning with the fact that best dividend stocksby their nature, provide a secure, stable and protected income stream investors in any market environment.
“We believe that the ‘dividend sweet spot’ is not finding the top performing stocksbut find Consistent companies that can increase their dividends year after year and have a proven track record. It is this underlying stability combined with the dividend yield that can provide a defensive cushion during periods of market turbulence, similar to the current environment,” Wilson said.
Against this backdrop, Morgan Stanley analysts have selected stocks that offer investors some of the the most reliable dividends available.
Philip Mrrs Int is known as one of the largest tobacco companies in the world and owner of the venerable Marlboro brand cigarettes. Although cigarettes and other smoking products make up the majority of the company’s sales, PM strongly emphasizes its smokeless product lines. These they include vaporizers, heated tobacco products, and oral nicotine pouches. The company boasts that its smokeless products, especially heated tobacco lines, have helped more than 13 million adult smokers worldwide to quit.
The company’s dividend is worth taking a close look at, as it offers investors a Reliable payment with a history of consistent long-term growth. P.M started paying dividends in 2008, when it was made public; Since then, the company has not missed any quarterly payments and has increased the dividend every yearwith a CAGR of 7.5%. The current quarterly dividend payment is $1.27 per share, up 2 cents from the previous quarter. The dividend is annualizes at $5.08 per common share and yields a strong 5.3%. Payment of the newly collected dividend is scheduled for September 27th.
The payment of dividends is supported and fully covered by the PM regular quarterly earnings, which in 2Q22 were $1.32 per diluted share. Philip Morris aims to Full-year diluted earnings per share in the range of $5.73 to $5.88which is good news for dividend investors, as achieving that goal will keep the dividend easily affordable for the company.
The analyst Pamela Kaufmanwho covers this tobacconist for Morgan Stanley, notices the increased sales of the company’s smokeless products, as well as its overall strong financial position, when recommending actions.
“Second quarter results reflect many of the key tenets of our thesis, including the Attractive IQOS momentum with accelerated growth in new IQOS users, strong fuel fundamentals with positive international cigarette market share/volumes and stronger underlying guidanceKaufman opined.
Looking ahead, Kaufman rates PM as overweight (buy) and sets a price target of $112 for 16% growth potential.
In general, Philip Morris shares have a moderate buy consensus, based on 7 revisions including 4 buys and 3 holds.
Philip Mrrs Int closed the session on Wednesday at $96.56 and the last crossing of the moving averages, the 70-period below the 200-period moving average, would give us a bearish signal. Meanwhile, the Ei indicators are mixed.
Citizens Financial Group
Citizens Finl Gr is a signature of retail banking in the US markets. It is based in Rhode Island and works through 1,200 branches in 14 states, centered in New England but extending into the Mid-Atlantic and Midwest regions. Retail and business clients can access a full range of services, including checking and deposit accounts, personal and small business loans, wealth management and even foreign exchange. For customers who cannot get to a branch, it offers mobile and online banking, and more than 3,300 ATMs.
Citizens Financial obtained revenue that exceeded 2.1 billion dollars in 2Q22, a year-on-year jump of 23.5%. The earnings were below expectations; to $364 million, net income decreased 43% year over year, and EPS, to 67 centswas less than half the $1.44 reported in the prior year quarter.
Despite the drop in earnings and share value, Citizens Financial felt confident enough to expand your capital return program. The Board authorized, in July, the repurchase of shares for up to 1,000 million dollars and an increase of 250 million dollars regarding the previous authorization.
At the same time, the company also announced a 8% increase in dividend payout on your quarterly common stock. The new payment 42 cents per share, came out in August; I know annualizes at $1.68 and yields a 4.5% yield. Citizens Financial has a history of reliable dividend payments and regular increases since 2014; the dividend has been raised twice in the last three years.
This action caught the attention of Betsy Graseck of Morgan Stanleywho makes an optimistic case for buying CFG.
“We are overweight citizens because of its outperforming earnings growth driven by multiple broad-based factors, including its differentiated loan categories driving better-than-peer loan growth, disciplined expense management and increased EPS from acquisitions based on additional fees,” Graseck wrote.
The rating of overweight (buy) from Graseck comes with a $51 target price. If your thesis develops, a twelve month profit of 37% could potentially be on the cards.
Financially strong banking firms are sure to catch the interest of Wall Street, and CFG shares have 13 recent analyst reviews on file, including 10 to buy and 3 to hold, giving the stock a consensus rating of buy strong. The average target price of $46.85 implies a 28% profit in a year.
Citizens Finl Gr it said goodbye on Wednesday at $36.50 and the 70-period moving average is above the last two candlesticks. Meanwhile, Ei indicators are mostly bearish.
AvalonBay a real estate investment trust (REIT) focused on apartment properties. REITs have a solid reputation for paying solid dividends; is it so required by tax codes to return a certain percentage of profits directly to shareholders and they often use dividends to meet regulatory requirements. AvalonBay owns, acquires, develops and manages multi-family developments in the New York/New Jersey metropolitan area, in New England and the Mid-Atlantic, Pacific Northwest and California regions. The company targets properties in the main urban centers of its operating areas.
The rent increase it has been a major component of the overall increase in the rate of inflation, and that has been reflected in AvalonBay’s results. The company’s second-quarter revenue of $650 million, were the highest in the last two years. As for the Profitsa “loudest” metric, reported $138.7 million in net income attributable to shareholders; The Diluted EPS reached 99 cents per sharedown from $3.21 in the prior year quarter.
While earnings per share declined, the company reported a year-over-year gain in a key metric, the fund from operations (FFO) attributable to common stockholders. On a diluted basis, the FFO grew 22% YoY, from $1.97 to $2.41. Dividend investors should keep this in mind, as REITs typically use FFO to cover the dividend.
AvalonBay’s dividend is last paid in July, at $1.59 per common share. The next payment, corresponding to October, has already been declared at the same rate. The quarterly payment of $1.59 is annualizes at $6.36 per common share and yields 3.3%. The firm has paid a quarterly dividend in each quarterwithout skipping a beat, since going public in 1994, and for the past 28 years has had a 5% average annual increase in pay.
The Morgan Stanley analyst Adam Kramer, sees a way forward for this company and explains why investors should jump in now: “We believe AVB can trade at a premium to peers in our coverage given peer-leading SS-Revenue and strong FFO per share, differentiated growth and development program. We believe that investors have a ‘free option’ in the development pipeline as the current stock price implies a multiple of 19.7x in our ’23e FFO ex. of external growth.
Kramer uses these comments to support your overweight rating (buy) in action, and target price, set at $242. Which suggests that AVB has a 26% upside potential ahead.
In total, AVB’s shares have 8 buys and 11 holdmaking the analyst consensus rating here a moderate purchase. Stock is the most expensive on this list, $190.87 per shareand the average target price of $226.17 is indicative of a growth potential of 18% for the coming months.