Across the first half of 2023, “risk-on” trades were in favor on Wall Street. Still, many investors remain skeptical of the rally. They continue to worry about rising rates, inflation, geopolitical risks, and weak growth in the recent June jobs report – among other things.
If you’re interested in tapping into the growth of 2023 but are concerned about chasing overheated momentum plays, here are five stocks to set your mind at ease. All of them post double-digit sales growth and a generous, sustainable dividend that could provide a bit of stability if things go south on Wall Street.
1. Gen Digital: Gen Digital Inc.
GEN,
provides cybersecurity solutions that protect individual devices against malware, viruses, adware and other online threats. The company was previously known as NortonLifeLock, two brands that consumers likely recognize for their security-related services.
Gen Digital ended fiscal 2023 on March 31. Full-year results it reported then were impressive — including 19% revenue growth, 22% growth in bookings, and 24% jump in operating income. Plus, the company has a decent dividend history with a consistent 12.5 cent quarterly payday. At only about 25% of total earnings, that income stream is not just sustainable but ripe for additional increases if recent growth trends continue.
2. Juniper Networks: Juniper Networks, Inc.
JNPR,
is a midsized technology company that specializes in routers, data gateways, network architectures and related digital services. Though a bit of a niche play, JNPR remains best-in-class at what it does. It is a respected enterprise tech brand with operating history dating back to 1996 and the early days of the internet. In a digital age where everyone needs to stay connected, Juniper remains an essential part of the modern economy.
Thanks to strong performance lately, Citigroup recently initiated coverage of Juniper stock with a “buy” rating in early July. Bigger picture, the consensus forecast is for roughly 10% revenue growth year-over-year in fiscal 2023 and earnings per share should jump about 20%. As for the income side, the company recently boosted its dividend payout to 22 cents a quarter, up a penny from last year. The dividend looks sustainable, at just about one third of total earnings currently.
3. Mondelez: Food-manufacturing giant Mondelez
MDLZ,
has been able to weather inflation’s rise, passing along increased costs to consumers loyal to familiar brands including Oreo cookies, Halls cough drops and Sour Patch Kids candy. The company receives more than 70% of its sales from outside the U.S. and is growing fast in emerging markets from Latin America to Eastern Europe.
Mondelez saw its shares rise back in April after strong earnings and raised guidance for sales and profit outlook on the year. All told, the company is projecting 12% revenue growth this year. Mondelez’s 38.5-cent quarterly payout is more than double the 19 cents it paid back in 2018, showing a strong commitment to dividend growth. Payouts are only about half of projected earnings and thus sustainable even if growth plateaus.
4. Open Text: Software company Open Text
OTEX,
is another cybersecurity growth stock that’s tailor-made for the current tech environment. The company specialzes in information-management software and firewalls. Perhaps unsurprisingly in this age of elevated hacking concerns, Open Text is growing fast. In its most recent quarterly report back in May, the company reported revenue growth of 41% year-over-year — with longer-term projections of roughly 30% revenue expansion projected for both fiscal 2023 and 2024.
Open Text has been paying dividends for roughly 10 years. Payouts have increased significantly from 11.5 cents per share in early 2017 to 24.3 cents per share currently. Those dividends are less than a third of total earnings, giving Open Text room for future dividend increases.
5. Sysco: Sysco
SYY,
is a leading provider to restaurants, institutional cafeterias and other parts of the foodservice industry worlwide. Sysco took a hit during the pandemic, but has steadily seen improvements in its operations as it returned to normalcy and growth.
In its most recent earnings report, Sysco reported 12% revenue growth — which matches Wall Street’s expectations of 12% revenue growth this full fiscal-year. Gross profit also increased about 14% year-over-year. Sysco recorded more than $68 billion in revenue last year, comfortably topping its 2019 tally of $60 billion.
As for dividends, Sysco has an track record of more than 40 consecutive years of dividend increases — including its most recent penny per share bump in July. With payouts roughly half of this year’s earnings, there’s ample headroom to keep paying shareholders.
As of this writing, Jeff Reeves did not own a position in any of the stocks mentioned in this article.
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