5 Defensive Stocks to Own for Consistent Dividends and Stable Earnings

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Concerns over the Russia-Ukraine war and high inflation have significantly affected the global equity markets lately. As the stock market is expected to remain highly volatile in the coming weeks, it could be wise to bet on defensive stocks Walmart (WMT), Novartis (NVS), Merck & Co. (MRK), GlaxoSmithKline (GSK), and AmerisourceBergen (ABC), which have a history of consistent dividend payments and earnings stability. Let’s take a look.

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Growing concerns over the Russia-Ukraine war and the Federal Reserve’s upcoming interest rate hikes are expected to keep the stock market under pressure in the foreseeable future. Today’s military attack on Ukraine has led to a sell-off in global stock markets and a surge in oil prices.

Given this scenario, betting on defensive stocks could be one of the best options for investors seeking to hedge their portfolios from the expected market volatility in the upcoming weeks. Companies that generate stable earnings and have a history of consistently paying dividends could be the best picks now.

Solid market reach and fundamental strength make Walmart Inc. (WMT), Novartis AG (NVS), Merck & Co., Inc. (MRK), GlaxoSmithKline plc (GSK), and AmerisourceBergen Corporation (ABC) ideal bets now. These stocks have a history of consistent dividend payments and generating stable earnings. Also, they are currently trading at discounts to their peers.

Walmart Inc. (WMT)

WMT operates retail, wholesale, supermarkets, other units, and e-commerce websites worldwide. The company operates through Walmart U.S.; Walmart International; and Sam’s Club. In addition, it offers fuel and financial services and related products. It has a 0.53 beta.

WMT will pay a $0.56 per share quarterly cash dividend on April 4, 2022. The stock pays a $2.24 per share dividend annually, translating into a 1.64% yield. Its dividend has grown at a 2.07% rate over the past five years. WMT paid dividends for 49 consecutive years.

On January 26, 2022, WMT and leading investment firm Ribbit Capital’s Fintech venture Hazel entered into definitive agreements to acquire fintech platforms, Even Responsible Finance, a leading responsible on-demand pay platform, and One Finance, an online-only nonbank financial institution. The combined business, which will operate under the brand name ONE, will provide users with an all-in-one financial services app to holistically manage their finances in one place. The ONE app will be integrated inside WMT’s physical and digital channels over time and offer solutions to its U.S. associates and weekly shoppers.

For its fiscal 2022 fourth quarter ended January 31, 2022, WMT’s total revenues increased marginally from the prior-year period to $152.87 billion. The company’s adjusted operating income came in at $6 billion, indicating a 5.9% rise from the year-ago period. WMT’s net income came in at $3.56 billion, compared to a net loss of $2.09 billion in the prior-year period. Its adjusted EPS increased 10.1% year-over-year to $1.53. The company had cash and cash equivalents of $14.76 billion as of January 31, 2022.

Analysts expect WMT’s EPS to improve 4.6% year-over-year to $6.76 for fiscal 2023, ending January 31, 2023. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $590.63 billion for the same fiscal year represents a 3.2% rise from the prior-year period. The company’s EPS is expected to grow at an 8.4% rate per annum over the next five years.

The stock has lost 0.3% over the past year and closed yesterday’s trading session at $135.05. WMT’s 0.74x forward EV/Sales is 61.8% lower than the 1.93x industry average. In terms of forward Price/Sales, WMT is currently trading at 0.64x, 52.6% lower than the industry average of 1.36x. The company’s EBITDA and EPS have grown at CAGRs of 3.9% and 29.2%, respectively, over the past three years.

WMT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Value, Stability, and Quality. Click here to see the additional ratings for WMT’s Growth, Momentum, and Sentiment. WMT is ranked #12 of 39 stocks in the A-rated Grocery/Big Box Retailers industry.

Novartis AG (NVS)

NVS is a Switzerland-based pharmaceutical company that researches, develops, manufactures, and markets branded and generic prescription drugs, active pharmaceutical ingredients, biosimilars, and ophthalmic products worldwide. The company uses science and digital technologies for treatments in the disease areas of immunology, dermatology, cancer, ophthalmology, neuroscience, respiratory, cardiovascular, renal, and metabolism. It has a 0.54 beta.

NVS will pay a CHF3.10 ($3.36) per share annual dividend on March 17, 2022, representing a 3.88% annual yield. The company’s dividend has grown at a 3.31% rate over the past five years. This marks the company’s 25th year of consecutive dividend increase.

On February 18, 2022, NVS’ Sandoz announced generic oncology medicine lenalidomide launch, indicated for several haemato-oncology conditions as recommended by the latest European Society for Medical Oncology (ESMO) guidelines. As the cost of treating multiple myeloma patients continues to rise, this launch would enable Lenalidomide Sandoz to expand access to affordable, high-quality treatment options for multiple myeloma patients.

For its fiscal 2021 fourth quarter ended December 31, 2021, NVS’ net sales increased 3.6% year-over-year to $13.23 billion. The company’s net income increased 676.9% year-over-year to $16.31 billion. Its EPS came in at $7.29, up 692.4% from the prior-year period. As of December 31, 2021, the company had $2.01 billion in cash and cash equivalents.

The consensus EPS estimate of $6.41 for fiscal 2022, ending December 31, 2022, represents a 1.9% rise from the prior-year period. It surpassed the consensus EPS estimates in three trailing four quarters. Analysts expect the company’s revenue to reach $53.72 billion for the same fiscal year, representing a 4.1% rise from the prior-year period. The company’s EPS is expected to grow at a 5.3% rate per annum over the next five years.

NVS has gained marginally over the past year and ended yesterday’s trading session at $86.52. In terms of forward EV/Sales, NVS is currently trading at 3.68x, 20% lower than the 4.60x industry average. In terms of forward Price/Sales, NVS is currently trading at 3.63x, 32.4% lower than the industry average of 5.37x. The company’s EBITDA and EPS have increased at CAGRs of 6.7% and 24.9%, respectively, over the past three years.

NVS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

It has an A grade for Stability and a B grade for Value, Growth, and Quality. Click here to see the additional ratings for NVS (Momentum and Sentiment). NVS is ranked #2 of 179 stocks in the Medical – Pharmaceuticals industry.

Merck & Co., Inc. (MRK)

MRK offers health solutions through prescription medicines, vaccines, biological therapies, and consumer care products. The company operates through two segments — Pharmaceutical and Animal Health. Its products are marketed directly and through joint ventures to drug wholesalers and retailers, hospitals, government agencies, and managed health care providers. It has a 0.45 beta.

MRK is set to a $0.69 per share quarterly dividend on April 7, 2022. The stock pays a $2.76 per share dividend annually, representing a 3.64% annual yield. The company’s dividend has grown at an 8.15% rate over the past five years. MRK has paid dividends for 32 consecutive years.

On February 8, 2022, MRK and Ridgeback Biotherapeutics, a biotechnology company primarily known for their involvement in developing a successful COVID-19 medication, announced the delivery of approximately 3.1 million courses of molnupiravir, an investigational oral antiviral COVID-19 medicine, to the U.S. government for allocation across the country. After receiving FDA approval, MRK has entered into an advance purchase and supply agreement for molnupiravir in more than 30 markets worldwide. This should continue to benefit the companies in expanding their reach.

For its fiscal 2021 fourth quarter ended December 31, 2021, MRK’s sales increased 23.5% year-over-year to $13.52 billion. The company’s non-GAAP pre-tax income came in at $4.78 billion, representing a 62.3% rise from the prior-year period. While its non-GAAP net income increased 83.6% year-over-year to 4.58 billion, its non-GAAP EPS grew 83.7% to $1.80.

Analysts expect MRK’s EPS to improve 21.4% year-over-year to $7.31 for fiscal 2022, ending December 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $57.46 billion for the same fiscal year represents an 18% rise from the prior-year period. The company’s EPS is expected to grow at a 9.6% rate per annum over the next five years.

Over the past year, the stock has gained 6.7% to close yesterday’s trading session at $75.84. MRK’s 3.63x forward EV/Sales is 21.1% lower than the 4.60x industry average. In terms of forward Price/Sales, MRK is currently trading at 3.34x, which is 37.8% lower than the industry average of 5.37x. The company’s EBITDA and EPS have grown at CAGRs of 12.8% and 28%, respectively, over the past three years.

MRK’s POWR Ratings reflect its solid prospects. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

The stock has a B grade for Growth, Value, Stability, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for MRK’s Momentum here. MRK is ranked #1 in the Medical – Pharmaceuticals industry.

GlaxoSmithKline plc (GSK)

Based in the U.K., GSK discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company focuses its research on respiratory diseases, HIV/infectious diseases, vaccines, immuno-inflammation, oncology, and rare diseases. It has a 0.36 beta.

GSK will pay a $0.62 quarterly cash dividend on April 7, 2022. The stock pays a $2.49 per share dividend annually, translating into a 5.77% yield. The company’s dividend has grown at a 1.76% rate over the past three years. GSK has paid dividends for 13 consecutive years.

On February 10, 2022, China’s National Medical Products Administration (NMPA) approved GSK’s Benlysta to treat adult patients with active lupus nephritis (LN). The approval extends the current indication in China as add-on therapy in adults and children aged five years and older with active systemic lupus erythematosus (SLE). This approval makes Benlysta China’s first and only biologic medicine approved for SLE and LN. Having received an FDA approval back in December 2020, this move should enable GSK to witness expanding market reach in the coming months.

For its fiscal 2021 fourth quarter ended December 31, 2021, GSK’s turnover increased 8.6% year-over-year to $12.94 billion. The company’s gross profit came in at $7.93 billion, showing a rise of 5% from the prior-year period. Its net profit came in at $1.25 billion, representing a 10.9% rise from the prior-year period. GSK’s EPS of $0.20 for the quarter indicates a 9.7% year-over-year improvement. As of December 31, 2021, the company had $5.76 billion in cash and equivalents.

The consensus EPS estimate of $3.37 for fiscal 2022, ending December 31, 2022, indicates an 8.4% rise from the year-ago period. Analysts expect the company’s revenue to reach $49.24 billion for the same fiscal year, representing a 5% rise from the year-ago period. It surpassed Street EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a rate of 5.2% per annum over the next five years.

The stock has gained 25.4% over the past year and ended yesterday’s session at $42.50. GSK’s 2.93x forward EV/Sales is 36.4% lower than the 4.60x industry average. In terms of forward Price/Sales, GSK is currently trading at 2.21x, 58.9% lower than the industry average of 5.37x. The company’s EBITDA and EPS have grown at CAGRs of 2.9% and 5.9%, respectively, over the past three years.

GSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

It has an A grade for Value and a B grade for Growth, Stability, and Sentiment. Click here to see the additional ratings for GSK (Quality and Momentum). GSK is ranked #4 in the Medical – Pharmaceuticals industry.

AmerisourceBergen Corporation (ABC)

ABC sources and distributes pharmaceutical products internationally. The company offers brand generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to healthcare providers. It has a 0.48 beta.

ABC will pay a $0.46 quarterly cash dividend on February 28, 2021. The stock pays a $1.84 per share dividend annually, translating into a 1.32% yield. The company’s dividend has grown at a 5.01% rate over the past three years. ABC has been paying dividends over the past 20 years consecutively.

On January 25, 2022, ABC and TrakCel, a leading innovator of cellular orchestration solutions, unveiled an integrated technology platform designed to accelerate patient access to prescribed cell and gene therapies and deliver complete visibility throughout the treatment journey. The enhanced offering combines OCELLOS, TrakCel’s advanced therapy orchestration platform, and Fusion, a customer relationship management and patient support ecosystem powered by ABC’s Lash Group. The companies should witness high demand in the upcoming months.

For its fiscal 2021 first quarter ended October 30, 2021, ABC’s revenue increased 13.5% year-over-year to $59.63 billion. The company’s non-GAAP gross profit came in at $2.02 billion, representing a 41.3% rise from the prior-year period. Its non-GAAP operating income came in at $749.15 million, up 21.4% from the prior-year period. As of December 31, 2021, the company had $3.17 billion in cash and cash equivalents.

Analysts expect the company’s EPS to reach $10.79 for the fiscal year ending September 30, 2022, representing a 16.5% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $237.43 billion for the same fiscal year indicates an 11% improvement from the prior-year period. The company’s EPS is expected to grow at a 10.3% rate per annum over the next five years.

The stock has gained 31% over the past year and ended yesterday’s trading session at $139.47. In terms of forward EV/Sales, ABC is currently trading at 0.15x, 96.8% lower than the 4.60x industry average. And in terms of forward Price/Sales, ABC is currently trading at 0.12x, which is 97.7% lower than the industry average of 5.37x. The company’s EBITDA and EPS have grown at CAGRs of 15.8% and 12.3%, respectively, over the past three years.

ABC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

It has a B grade for Value, Growth, Stability, and Sentiment. Click here to see the additional ratings for ABC (Quality and Momentum). ABC is ranked #5 of 85 stocks in the Medical – Services industry.


WMT shares fell $0.17 (-0.13%) in after-hours trading Thursday. Year-to-date, WMT has declined -7.02%, versus a -9.82% rise in the benchmark S&P 500 index during the same period.


About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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