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3 Dividend Stocks That Are Racing Higher in 2022 and Still Have Room to Run

After last week’s stock market sell-off, The Nasdaq Composite finds itself just a couple of percentage points away from bear market territory while the S&P 500 is back in a correction. Yet many large, well-known industry-leading growth stocks are down a staggering 70% or more from their all-time highs.
Procter & Gamble (NYSE: PG), Raytheon Technologies (NYSE: RTX), and Newmont (NYSE: NEM) are three dividend stocks that are up for the year and are hovering around their all-time highs. Here’s why each stock could still have more room to run.

Image source: Getty Images.

The tortoise of the stock market
Daniel Foelber (Procter & Gamble): The quintessential recession-resistant stock, Procter & Gamble, continues to live up to its reputation. The company reported its Q3 fiscal 2022 results last week and they did not disappoint. Net sales were up 7% compared to Q3 fiscal 2021. Organic sales were up an even more impressive 10%. And diluted and core earnings per share (EPS) were up 6%. 
The cherry on top of another great quarter was an increase in full-year fiscal 2022 sales guidance from 3% to 4% year-over-year growth versus fiscal 2021 to a new range of 4% to 5% growth, and organic sales growth of 6% to 7%. P&G expects fiscal 2022 diluted EPS and core EPS between $5.83 and $6 for the year. And it’s doing all of that with a $3.2 billion — or $1.26 per share — after-tax hit from higher commodity costs, freight costs, and negative foreign exchange impacts. 
Despite the headwinds, P&G continues to steadily grow its business during a time when so many other companies are facing slowing growth. In the process, it is also returning a boatload of cash to shareholders through the divided and share buybacks. P&G still expects to pay over $8 billion in dividends in fiscal 2022 and $10 billion in common stock repurchases. 
Growth investors may look at P&G’s mid-single-digit growth numbers and raise their eyebrows. But P&G isn’t playing a game of wowing investors with glitz and glam. Rather, it is the tortoise of the stock market. It’s a steady grower that rarely misses a target and almost always comes through, has been raising its dividend for 66 consecutive years, has bought back a ton of stock over the years (which raises earnings per share for investors), and is the industry leader in several markets it serves.
All told, it’s hard to find as reliable of a business as P&G in an inflationary environment. And for that reason, investors continue to gravitate toward P&G during times of uncertainty. P&G only has a dividend yield of 2.3%. But its consistency is what investors value more than a high yield.
Aerospace and defense are good markets to be in right now
Lee Samaha (Raytheon Technologies): The company is a Dividend Aristocrat by stint of its commercial aerospace-focused businesses, Pratt & Whitney and Collins Aerospace, formerly being part of United Technologies. As a result, Raytheon Technologies is a good option for income-seeking investors, currently sporting a near 2% dividend yield and good growth prospects in all four of its businesses.
The recent results from Delta Air Lines confirmed that the commercial aviation industry is on track for a multi-year recovery, and management is already expecting a sharp increase in profitability for Pratt & Whitney and Collins Aerospace in 2022. The former has long-term growth prospects coming from its engines on existing aircraft and its geared turbofan engine on the Airbus A320 NEO family of aircraft. The latter is an all-encompassing behemoth in the commercial aerospace world, providing everything from cabin seating and structures to avionics and communications.
In the defense businesses, the extensive use of Raytheon’s anti-tank Javelin munitions and Stinger portable air defense systems in the conflict in Ukraine has highlighted the importance of Raytheon Missiles & Defense and Raytheon Intelligence & Space to modern military budgets.
It all adds up to make the company one of the best ways to play the defense market right now. Raytheon stock is up around 22% in 2022 at the time of this writing, and investors have every expectation that management could raise its full-year guidance when the company reports first-quarter earnings on April 26 — something to look out for in earnings season.
The dividend stock with a heart of gold
Scott Levine (Newmont): Enjoying a lustrous start to 2022, shares of Newmont Corporation, the largest gold mining company based on market cap, have soared more than 25% since the new year began. In and of itself, the stock’s performance is impressive, but it’s even more noteworthy considering the price of the yellow stuff has climbed about 8% and the S&P 500 has tumbled more than 7% at the time of this writing. For investors seeking to have their portfolios glitter a little more brightly, Newmont and its stock — which offers a 2.7% forward yield — are certainly worth a closer look.
Unlike junior mining companies that only have the resources to develop a limited number of assets, Newmont is an industry behemoth with a market cap of more than $61 billion. Spanning four continents, Newmont’s projects are in various stages of development and will help the company to achieve its target of sustaining annual gold production at about 8 million gold equivalent ounces (GEOs) through 2031. Currently, for example, Newmont is advancing the Tanami Expansion 2 project in Australia, which is expected to expand the mine life of the asset beyond 2040. In addition, the company is developing the Ahafo North in Ghana — a project that has a 13-year mine life and is estimated to achieve average annual production of 300,000 GEOs from 2024 to 2028.
Digging into Newmont’s balance sheet, investors will find that the company isn’t jeopardizing its financial health by advancing the projects in its pipeline. During its first-quarter 2022 earnings report, Newmont announced that it has a conservative net debt-to-adjusted earnings before interest, depreciation, and amortization ratio of 0.3. Furthermore, the company’s dividend is well covered by its free cash flow generation. In 2021, Newmont returned $2.20 per share to investors through the dividend, while it generated free cash flow per share of $3.81.
Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy. –

After last week’s stock market sell-off, The Nasdaq Composite finds itself just a couple of percentage points away from bear market territory while the S&P 500 is back in a correction. Yet many large, well-known industry-leading growth stocks are down a staggering 70% or more from their all-time highs.

Procter & Gamble (NYSE: PG), Raytheon Technologies (NYSE: RTX), and Newmont (NYSE: NEM) are three dividend stocks that are up for the year and are hovering around their all-time highs. Here’s why each stock could still have more room to run.

Image source: Getty Images.

The tortoise of the stock market

Daniel Foelber (Procter & Gamble): The quintessential recession-resistant stock, Procter & Gamble, continues to live up to its reputation. The company reported its Q3 fiscal 2022 results last week and they did not disappoint. Net sales were up 7% compared to Q3 fiscal 2021. Organic sales were up an even more impressive 10%. And diluted and core earnings per share (EPS) were up 6%. 

The cherry on top of another great quarter was an increase in full-year fiscal 2022 sales guidance from 3% to 4% year-over-year growth versus fiscal 2021 to a new range of 4% to 5% growth, and organic sales growth of 6% to 7%. P&G expects fiscal 2022 diluted EPS and core EPS between $5.83 and $6 for the year. And it’s doing all of that with a $3.2 billion — or $1.26 per share — after-tax hit from higher commodity costs, freight costs, and negative foreign exchange impacts. 

Despite the headwinds, P&G continues to steadily grow its business during a time when so many other companies are facing slowing growth. In the process, it is also returning a boatload of cash to shareholders through the divided and share buybacks. P&G still expects to pay over $8 billion in dividends in fiscal 2022 and $10 billion in common stock repurchases. 

Growth investors may look at P&G’s mid-single-digit growth numbers and raise their eyebrows. But P&G isn’t playing a game of wowing investors with glitz and glam. Rather, it is the tortoise of the stock market. It’s a steady grower that rarely misses a target and almost always comes through, has been raising its dividend for 66 consecutive years, has bought back a ton of stock over the years (which raises earnings per share for investors), and is the industry leader in several markets it serves.

All told, it’s hard to find as reliable of a business as P&G in an inflationary environment. And for that reason, investors continue to gravitate toward P&G during times of uncertainty. P&G only has a dividend yield of 2.3%. But its consistency is what investors value more than a high yield.

Aerospace and defense are good markets to be in right now

Lee Samaha (Raytheon Technologies): The company is a Dividend Aristocrat by stint of its commercial aerospace-focused businesses, Pratt & Whitney and Collins Aerospace, formerly being part of United Technologies. As a result, Raytheon Technologies is a good option for income-seeking investors, currently sporting a near 2% dividend yield and good growth prospects in all four of its businesses.

The recent results from Delta Air Lines confirmed that the commercial aviation industry is on track for a multi-year recovery, and management is already expecting a sharp increase in profitability for Pratt & Whitney and Collins Aerospace in 2022. The former has long-term growth prospects coming from its engines on existing aircraft and its geared turbofan engine on the Airbus A320 NEO family of aircraft. The latter is an all-encompassing behemoth in the commercial aerospace world, providing everything from cabin seating and structures to avionics and communications.

In the defense businesses, the extensive use of Raytheon’s anti-tank Javelin munitions and Stinger portable air defense systems in the conflict in Ukraine has highlighted the importance of Raytheon Missiles & Defense and Raytheon Intelligence & Space to modern military budgets.

It all adds up to make the company one of the best ways to play the defense market right now. Raytheon stock is up around 22% in 2022 at the time of this writing, and investors have every expectation that management could raise its full-year guidance when the company reports first-quarter earnings on April 26 — something to look out for in earnings season.

The dividend stock with a heart of gold

Scott Levine (Newmont): Enjoying a lustrous start to 2022, shares of Newmont Corporation, the largest gold mining company based on market cap, have soared more than 25% since the new year began. In and of itself, the stock’s performance is impressive, but it’s even more noteworthy considering the price of the yellow stuff has climbed about 8% and the S&P 500 has tumbled more than 7% at the time of this writing. For investors seeking to have their portfolios glitter a little more brightly, Newmont and its stock — which offers a 2.7% forward yield — are certainly worth a closer look.

Unlike junior mining companies that only have the resources to develop a limited number of assets, Newmont is an industry behemoth with a market cap of more than $61 billion. Spanning four continents, Newmont’s projects are in various stages of development and will help the company to achieve its target of sustaining annual gold production at about 8 million gold equivalent ounces (GEOs) through 2031. Currently, for example, Newmont is advancing the Tanami Expansion 2 project in Australia, which is expected to expand the mine life of the asset beyond 2040. In addition, the company is developing the Ahafo North in Ghana — a project that has a 13-year mine life and is estimated to achieve average annual production of 300,000 GEOs from 2024 to 2028.

Digging into Newmont’s balance sheet, investors will find that the company isn’t jeopardizing its financial health by advancing the projects in its pipeline. During its first-quarter 2022 earnings report, Newmont announced that it has a conservative net debt-to-adjusted earnings before interest, depreciation, and amortization ratio of 0.3. Furthermore, the company’s dividend is well covered by its free cash flow generation. In 2021, Newmont returned $2.20 per share to investors through the dividend, while it generated free cash flow per share of $3.81.

Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

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