5 Dividend Stocks Could Be Big Winners After the New COVID-19 Variant Shock
While most everyone in the scientific community suspected that cases of COVID-19 would spike as we got closer to winter in the northern and the eastern parts of the country, similar to the spike in the South during the summer, most of the pundits were not expecting a new variant from South Africa to pop up. However, that’s what coronaviruses do, they mutate. In fact, the Delta variant was more than twice as transmissible as the virus that originally emerged in Wuhan, China.
The possibility of further significant mutations in the virus has arrived, and while the caseload is small, and pharmaceutical companies like Johnson & Johnson are already testing the current vaccinations against the newly crowned variant Omicron, the panic last Friday was immediate as the market took the biggest one-day shot since June of 2020.
Another massive lockdown in the United States seems unlikely, especially with so many people already vaccinated, but there could be a return to some restrictions. So, we screened the stay-at-home and pharmaceutical stocks to see which ones could perhaps make sense now. We looked for stocks rated Buy that pay solid dividends. Scared investors flocked to the Treasury market on Friday, pounding interest rates lower, so all five are even more attractive on a total return basis.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
If people opt to stay at home more, the grocery business should indeed be stellar, especially since the holidays are upon us. Albertsons Companies Inc. ( NYSE: ACI ) engages in the operation of food and drug stores in the United States.
The company's food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services. As of February 27, 2021, it operated 2,277 stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets and Balducci's Food Lover's Market. It operated 1,727 pharmacies, 1,313 in-store branded coffee shops, 400 adjacent fuel centers, 22 distribution centers and 20 manufacturing facilities, as well as various digital platforms.
The company recently announced the launch of Albertsons Media Collective, a retail media network designed to deliver digitally native, shopper-centric and engaging branded content to the company’s ever-growing network of shoppers.
Investors receive a 1.35% dividend. Deutsche Bank has a $38 price target on Albertsons Companies stock. The Wall Street consensus target is $32.56, and the final trade on Friday was posted at $35.72 a share.
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The stock was a big winner during the initial stages of the pandemic but has sold off big-time and is offering the best entry point in over a year. Clorox Co. ( NYSE: CLX ) manufactures and markets consumer and professional products worldwide.
The Health and Wellness segment offers cleaning products, such as laundry additives and home care products primarily under the Clorox, Clorox2, Scentiva, Pine-Sol, Liquid-Plumr, Tilex and Formula 409 brand names. It offers professional cleaning and disinfecting products under the CloroxPro, Clorox Healthcare and Clorox Total 360 brand names; professional foodservice products under the Hidden Valley brand name; and vitamins, minerals and supplement products under the RenewLife, Natural Vitality, NeoCell and Rainbow Light brand names in the United States.
The Household segment provides cat litter products under the Fresh Step, Scoop Away and Ever Clean brand names; bags and wraps under the Glad brand name; and grilling products under the Kingsford and Kingsford Match Light brand names in the United States. The Lifestyle segment offers dressings, dips, seasonings and sauces, primarily under the Hidden Valley brand name. Its natural personal care products are under the Burt's Bees brand name, and its water-filtration systems and filters are under the Brita brand name in the United States.
The International segment provides laundry additives; home care products; water-filtration systems and filters; digestive health products; grilling products; cat litter products; food products; bags and wraps; natural personal care products; and professional cleaning and disinfecting products internationally, primarily under the Clorox, Ayudin, Clorinda, Poett, Pine-Sol, Glad, Brita, RenewLife, Ever Clean and Burt's Bees brand names.
Clorox stock investors receive a 2.85% dividend. The Citigroup price target is $193, well above the $162.03 consensus target. The stock popped almost 4% on Friday to close at $174.21.
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This top dividend payer also is a very safe play for investors. Colgate-Palmolive Co. ( NYSE: CL ) is the stock to buy in consumer staples, which could see an increase in demand with more stay-at-home time possibly on the way. Colgate continues to deliver solid execution and is one of the best-positioned companies in its sector, given its strong brands in attractive categories, particularly oral care.
Over half of Colgate's total revenues (52%) are derived in faster-growth emerging economies, and the company maintains leading or near-leading market shares across Brazil, Russia, India and China. While those have slowed over the last year, a pickup in growth could be coming, especially with a weak dollar making products attractive overseas.
Investors receive a 2.31% dividend. The $98 Goldman Sachs price target compares with the $84.45 consensus price target for Colgate-Palmolive stock. Shares closed Monday at $74.06.
Johnson & Johnson
With a diverse product base and a very popular and solid brand, this is among the most conservative big pharmaceutical plays, and vaccine demand could spike again. Johnson & Johnson ( NYSE: JNJ ) is one of the top market cap stocks in the health care sector and raised the dividend for shareholders this year for the 56th consecutive year.
With everything from medical devices to over-the-counter health items and prescription drugs, the company remains one of the most diversified health care names on Wall Street. It also has one of the most exciting pipelines of new drugs in the sector. All that makes the stock an outstanding holding for conservative investors with a long-term investment outlook.
Johnson & Johnson generates a little over half of its sales in international markets, which are expected to see higher spending on health care over the next 10 years and beyond.
Shareholders receive a 2.66% yield. BofA Securities set its price target at $200. The consensus target is $188.29, and Johnson & Johnson stock closed at $159.20 on Friday.
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This is another top pharmaceutical stock, and one of the winners in the COVID-19 vaccine race, and it also could see an increase in demand due to the new variant. Pfizer Inc. ( NYSE: PFE ) is a global biopharmaceutical company with a diversified portfolio of products and pipeline candidates.
Pfizer is one of the largest pharmaceutical companies in the world as measured by market capitalization and revenue, and it is a component of the Dow Jones industrial average. The company's commercial operations are divided into two business segments: Innovative Health and Essential Health.
Germany's BioNTech and Pfizer said they expect data "in two weeks at the latest" to show if their jab can be adjusted for the new variant. This means a response to the new variant could be much faster than the Delta variant response was, and it also means the chances are good that the downside could be much less as well.
The dividend yield is a healthy 2.89%. Truist Securities has a $58 price target on Pfizer stock. The shares saw a new 52-week high of $54.94 on Friday, before closing at $54.00, which was up over 6% for the day.
No doubt, we will see a ramp-up of the usual rhetoric that has accompanied this virus for almost two years now. The reality is European countries are heavily vaccinated, and it’s a solid bet that big pharma can tweak their vaccines fast to meet this new challenge. That noted, with a very overbought and expensive stock market, these may be solid ideas as the sellers toss momentum shares overboard.