2022 might be said to be in a bear market since the majority of equities are now trading at lower prices, even if the market hasn’t affected every stock in the same way. Namely, dividend aristocrats, stocks with over 25 dividend growth streaks, have outperformed the S&P 500 by two times and the Nasdaq by three times.
The SPDR S&P US Dividend Aristocrats (LON: UDVD), an exchange-traded fund (ETF) that tracks all of the dividend aristocrats, is down ‘only’ 8% year-to-date (YTD).
Despite smaller losses than most tech names, dividend aristocrats are not immune to potential losses; hence, Finbold drilled down and identified two which could represent fair value and offer benefits for investors in June.
Consolidated Edison (NYSE: ED)
ED is a utility holding company operating in the New York state through subsidiaries offering regulated utility services. The main difference between other utilities and ED is that revenue in a regulated utility company is more predictable since they apply to the New York Department of Public Service to request rate increases.
In its latest earnings report, the company posted revenue of $4.06 billion, a year-on-year (YoY) increase of 10.3%, beating estimates by $350 million. On the other hand, earnings per share (EPS) missed by $0.01, to a total EPS of $1.47. Further, the company affirmed its 2022 forecast, which should keep the dividend yield at 3.32% safe, offering shareholders $0.79 per share.
Meanwhile, since October 2021, the shares have been in upward momentum, with the recent sessions showing a slight dip of shares below the 20-day and 50-day Simple Moving Averages (SMAs). Seemingly the support line has been created at around $91; however, a larger pullback should be sought before buying in.
Unlike the share performance, analysts rate the shares a moderate sell due to the rally the shares have had in 2022. Price predictions for the next 12 months have already been overcome as the shares trade at $95.15, which is 7.23% higher than the $88.27 analysts predicted for 2022.
Cardinal Health (NYSE: CAH)
Cardinal Health is the smallest of the Big three drug distributors in the U.S., with a 50+ year history and operations in over 40 countries. The company also manufactures and supplies medical products to hospitals, clinics, and laboratories. In their earnings, the company posted revenue of $44.8 billion, a 14.1% YoY increase, beating estimates by $1.6 billion.
Conversely, the EPS missed by $0.07, to a total EPS of $1.45, further the company affirmed its 2022 full-year guidance. On May 11, the company was awarded a $2.25 billion defense contract, which should help the firm keep its 3.71% yield safe, offering $0.4957 per share.
In general, shares have been moving up in 2022, with a decline that started in the second half of April, where shares have now just closed above the 200-day SMA.
Noticeable volume increases were noted in May, but this hasn’t persisted through June, with shares now bouncing off the potential resistance at $52. More upside could be seen if shares move aggressively above the 20-day SMA.
Further, analysts rate the shares as a hold, predicting that the average price in the next 12 months will reach $61.11, which is 14.31% higher than the current trading price of $53.46.
Dividend aristocrats have had a ‘solid’ showing in 2022, compared to most of the Nasdaq cohort, which has been heavily punished this year. Despite not losing much, most of the members of this prestigious list are highly priced, and investors could do well to wait for a pullback before investing.
Accordingly, ED could be due to a pullback, while CAH recently had one, possibly offering a solid entry position. Either way, the dividend should not be in question since both companies create enough revenue to cover them and take pride in handing out cash to their shareholders.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.